Ryan v Lobb
[2023] NZHC 1518
•19 June 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 1518
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 May 2023 Appearances:
W M Patterson for Plaintiffs
H L Thompson for Second Plaintiff
R J Latton for First and Third DefendantsJudgment:
19 June 2023
JUDGMENT OF EDWARDS J
This judgment was delivered by me on 19 June 2023 at am/pm.
Registrar/Deputy Registrar
Solicitors/Counsel:
Patterson Hopkins, AucklandMcMahon Butterworth Thompson, Auckland R L Latton, Auckland
RYAN v LOBB [2023] NZHC 1518 [19 June 2023]
[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 (Judgment), this Court ordered Mr Lobb to give vacant possession of the Property and directed the receiver of the Trust to sell it.1 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:2
(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 pending determination of an appeal.
Factual background
[6] The relevant factual background is comprehensively set out in the Judgment.3 What follows is a summary of the key facts relevant to the current application.
1 Ryan v Lobb [2023] NZHC 689 [Judgment].
2 Mr Latton represents Mr Lobb in relation to the stay application, and Mr Lobb and WAG Trustees (2020) Ltd in relation to the mortgage application.
3 Judgment, above n 1, at [10]–[44].
[7] Mr Lobb and Ms Ryan were married on 8 January 2000. There are two children of their marriage.
[8] Mr Lobb and Ms Ryan purchased the Property in their personal names in May 2003. The purchase price was funded by cash and a Westpac loan in Mr Lobb and Ms Ryan’s personal names secured by a mortgage over the Property (mortgage 5591907.4).
[9] The Trust was settled on 17 June 2005. Mr Lobb, Ms Ryan and the Public Trust were trustees. The discretionary beneficiaries were (and still are) Mr Lobb, Ms Ryan, their children, remoter issue and any spouse or partner of such persons. The term of the Trust is 80 years.
[10] In August 2005, the Property was transferred to the Trust under a deed of sale, with a debt back to Mr Lobb and Ms Ryan of $550,000 each for the purchase price of
$1.1 million. The existing mortgage 5591907.4 was varied (presumably to recognise the new registered proprietors of the land).
[11] In May 2015, the Public Trust was replaced by Lockhart Trustee Services No. 56 Ltd (Lockhart) and the Property was vested in these three trustees—Lockhart, Mr Lobb and Ms Ryan. The borrowing remained in Mr Lobb and Ms Ryan’s personal names. It was guaranteed by the trustees of the Trust. The terms of the guarantee included principal debtor obligations. The guarantee was secured by mortgage 9977107.3 and mortgage 5591907.4 was discharged. It is mortgage 9977107.3 which is the Mortgage at issue in this case.
[12] Over time, Mr Lobb and Ms Ryan forgave the debt owed by the trustees and it was fully forgiven in 2011 after gift duty was abolished.
[13] Mr Lobb and Ms Ryan separated in 2016 and their marriage was dissolved in 2019. Later that year, Lockhart applied to the Court to be discharged as a trustee. By judgment dated 27 July 2020, all three trustees of the Trust were removed, and Mr Noyce was appointed a receiver of the Trust.4
4 Lockhart Trustee Services No. 56 Ltd v Ryan [2020] NZHC 1823.
[14] At the time of the receiver’s appointment, the Westpac loan was in default, and Westpac had served a Property Law Act 2007 (PLA) notice on the trustees of the Trust. That notice had expired and a mortgagee sale was imminent.
[15] Mr Lobb and his father (Mr Warwick Lobb) made their own arrangements to repay Westpac. Mr Warwick Lobb is a director of WAG which is the sole trustee of the WAG Family Trust. The WAG Family Trust was formed to benefit the family of Mr Warwick Lobb and his wife, including Mr Lobb.
[16] WAG borrowed the sum of $1.4 million from a second-tier lender which was secured over properties owned by WAG. WAG then advanced $1.4 million to Mr Lobb to enable him to repay the outstanding sums under the Westpac loan. WAG also borrowed the sum of $100,000 from a different lender which was also advanced to Mr Lobb to discharge costs and other obligations owed to the second defendant (Lockhart).5
[17] On 28 August 2020, Mr Lobb wrote to Westpac seeking to redeem the Mortgage pursuant to s 102 of the PLA, and requesting the transfer of that Mortgage to WAG.6 Section 102 of the PLA provides that a person entitled to redeem a mortgaged property may request the mortgagee to transfer the mortgage to a nominated person. Westpac considered Mr Lobb was an entitled person under s 102, and it was therefore obliged by s 103 of the PLA to transfer the Mortgage to WAG as the nominated person.
[18] Westpac agreed to transfer the Mortgage to WAG on terms and conditions set out in a Deed dated 3 September 2020. That Deed provided for an assignment of the Mortgage in consideration for the “Purchase Price”, defined to mean the amount secured by the Mortgage payable on the settlement date.
5 The submissions were made on the basis that Mr Lobb’s indebtedness to WAG was for the
$1.4 million advanced to Mr Lobb. However, on my reading of the deed between WAG and Mr Lobb, the indebtedness only extends to interest on the loan from the second-tier lender to WAG. As the issue does not affect the determination of the application, I do not need to address it any further.
6 This is recorded in a deed between Westpac and WAG dated 3 September 2020.
[19] Mr Warwick Lobb confirms the flow of funds went from the second-tier lender to WAG; from WAG to Mr Lobb; and then from Mr Lobb to Westpac. Funds totalling
$1,385,428.68 were advanced to Westpac on 4 September 2020, and the Mortgage was transferred to WAG on the same day.
[20] Westpac’s lawyers confirmed that the Mortgage had been redeemed by Mr Lobb on 4 September 2020 and that the Mortgage was transferred to WAG at his request. The email also confirmed that the underlying loans and guarantee had not been transferred and that the guarantee and indemnity would remain in place until Westpac was satisfied that there was no need to call on it.
Judgment
[21] This proceeding was commenced by Ms Ryan in August 2019. There is a convoluted procedural history to the proceeding outlined in the Judgment which is unnecessary to repeat here.7
[22] The hearing of the proceeding was before Hinton J. The key issue in dispute turned on the proper interpretation of cl 2.5(3) of the Trust deed. That clause provides:
If the Settlors separate (or their marriage is legally dissolved), either Settlor may give the Trustees written notice requiring them to resettle (on new Trusts acceptable to the Settlor who has given notice) such part of the Trust assets as the Trustees consider fair and equitable having regard to the respective contributions of the Settlors (whether by gifting, inheritance or otherwise) to the total assets of the Trust.
[23] Hinton J considered that questions of implementation were also engaged in the proceeding, and that she had jurisdiction to exercise the Trust’s power in this case.
[24]The key findings were summarised by Her Honour as follows:
[167] The relevant contributions of the parties to be taken into account under cl 2.5(3) are their financial contributions to the assets during the relationship being the sums gifted as shown in the trust records. Those contributions are equal. There are no other relevant contributions of the parties to be taken into account.
7 Judgment, above n 1, at [55]–[65].
[168] There are also no third party contributions or claims to be taken into account. The claim by Mr Lobb that his father was always the beneficial owner of Ms Ryan’s share in Orakei Road cannot be advanced by Mr Lobb and is seriously flawed in any event.
[169] The relevant assets are as shown in the last trust accounts prepared by the Public Trustee.
[170] In assessing fairness and equity, I take into account the full factual background detailed in this judgment and have given particular consideration to the position of the children on the assumption that Mr Lobb is correct: the parties’ daughter lives at Orakei Road and both children wish it to be retained. I consider cl 2.5(3) was clearly intended to prevail over the children’s views particularly at their age and with the length of time that has passed since the separation. Both trusts will continue to make provision for them as beneficiaries. Orakei Road was intended to primarily benefit the parties for their lifetime and for some years it has been of no benefit to Ms Ryan.
[171] The terms of the Verena Ryan Family Trust are a matter for Ms Ryan under cl 2.5(3). I have noted that the children are included as discretionary beneficiaries and I would have been concerned as to fairness and equity were they not.
[172] Mr Lobb Senior’s position falls outside the considerations under cl 2.5(3). He volunteered repayment of the Westpac mortgage and it was imposed on Ms Ryan who wished the property sold, even if it were a mortgagee sale. That was a reasonable position for her to take in all of the circumstances.
[173] Taking all matters into account, I consider the jewellery should be vested according to use. All other assets are to be divided equally. The only “liability” (to be deducted from the trust assets) for purposes of a resettlement on the Verena Ryan Family Trust is the sum of $1.4m (the former Westpac debt referred to above).
(footnotes omitted)
[25] Her Honour made orders in relation to the jewellery and furniture owned by the Trust. The orders made in relation to the Property and the distribution of the proceeds of sale were as follows:
[176] …
3.Mr Lobb and others occupying 23 Orakei Road, Remuera are to provide vacant possession to the receiver within two months of the date of this judgment.
4,The receiver is directed to sell 23 Orakei Road at such a price and upon such terms as he thinks fit.
5.50 per cent of the sum reached by deducting from the gross sale price only the costs of sale, the receiver’s costs and the sum of $1.4m, is to be paid to the Verena Ryan Family Trust.
[26] The $1.4 million figure referred to in order five was the (rounded) sum used to repay the Westpac loan.8 As recorded at [53] of the Judgment, Ms Ryan had volunteered for this sum to be taken into account in the re-settlement under cl 2.5(3).
[27] As already noted, the Judge reserved leave to the receiver to seek further directions or orders of the Court including but not limited to the following:
[177] …
(a)Obtaining vacant possession of the property;
(b)Obtaining the discharge of the mortgage over the property now vested in WAG Trustees (2020) Limited;
(c)Directions as to issues that might arise regarding GST claims by the IRD, if any;
(d)Making interim distributions, if sought by either Ms Ryan or Mr Lobb.
[28] Orders were also made to take effect upon the completion by the receiver of his duties and any necessary reports to the Court.9
Post-Judgment events
[29]The Judgment was delivered on 6 April 2023.
[30] Two days later, on 8 April 2023, WAG purported to issue a PLA notice under s 119 of the PLA. The receiver and Ms Ryan contend there are deficiencies with this notice and it was not served on all the registered proprietors of the Property. Mr Warwick Lobb has sworn an affidavit in which he accepts the deficiencies in the notice.
[31] On 2 May 2023, the receiver applied for various orders pursuant to the leave reserved by Hinton J. Downs J made some of the orders sought on 4 May 2023 including an injunction in the following terms:
Injuncting WAG Trustees (2020) Limited from taking any steps under its notice dated 8 April 2023, purportedly given to the plaintiff and to the first
8 Judgment, above n 1, at [173].
9 At [178].
defendant under section 119 of the Property Law Act 2007; or under mortgage 9977107.3; or both, pending further order of the Court.
[32] The hearing of the current applications took place on Wednesday, 24 May 2023. The decision was reserved.
[33] Following that hearing, Mr Blair Lobb (Mr Lobb’s brother, and the son of Mr Warwick Lobb) purported to act on behalf of WAG by issuing trespass notices to the other registered proprietors of the Property (Ms Ryan and Lockhart) and purporting to issue a notice of mortgagee in possession. Those notices were subsequently withdrawn, with an acknowledgement that WAG was no longer in possession and that the injunction prohibited any steps being taken on the PLA notice or Mortgage pending further order of the Court.
[34] Finally, and for completeness, I record that Mr Lobb commenced a proceeding against Ms Ryan for contribution to the repayment of the Westpac loan. Ms Ryan’s protest to jurisdiction on the grounds that the claim fell within the exclusive jurisdiction of the Family Court was upheld, and the High Court proceedings were dismissed.
What (if anything) does the Mortgage secure?
[35] The receiver seeks declarations that the registered proprietors of the Property do not owe any money or any other obligation to WAG, and that the Mortgage does not secure the repayment of any debt or the performance of any obligations by the registered proprietors. An order discharging the Mortgage is also sought.
[36] The receiver accepts that following transfer of the Mortgage by Westpac to WAG, the latter is the registered mortgagee with an indefeasible title to the Mortgage. However, the receiver says that the Mortgage does not secure any debt or obligations and should therefore be discharged.
[37] Both Mr Lobb and WAG oppose the orders sought by the receiver. They contend that the Mortgage secures Mr Lobb’s indebtedness to WAG.
[38] There are various provisions in both the PLA and Land Transfer Act 2017 (LTA) which address the assignment and transfer of Mortgages.10 Mr Lobb and WAG do not rely on these statutory provisions. Neither claim rights of subrogation under the terms of the guarantee or Westpac loan. The sole focus at the hearing before me was on the interpretation of the Mortgage, and in particular, the definition of Secured Money in cl 1.2 of the Mortgage.
[39] That interpretation task is to be undertaken in accordance with ordinary contract interpretation principles. The Supreme Court has confirmed that interpretation is an objective process that requires the court to ascertain what the reasonable person, with all the background knowledge reasonably available to the parties at the time of the contract, would have understood the contract to mean.11
[40] The starting point is cl 1.1 of the Mortgage which sets out the operative clause of the Mortgage. That clause provides that in consideration for the “Secured Money” (as defined in the Mortgage) “… you, as the mortgagor, … mortgage all of your estate and interest in the Land …”.
[41]“Secured Money” is defined in cl 1.2 of the Mortgage as follows:
1.2Secured Money
The “Secured Money” secured by the mortgage is all money which you (whether alone or with one or more others) may Owe to the Secured Parties now or in the future for any reason. When “Secured Money” is used in relation to a particular Secured Party, it means the Secured Money that is Owing to that Secured Party. The Secured Money includes:
• all further advances by way of financial accommodation (as defined in section 93 of the Property Law Act 2007) to you;
• all money that you contingently Owe a Secured Party now or in the future (including under a guarantee);
• all amounts needed to reimburse a Secured Party for:
10 See for example, Property Law Act 2007, ss 53B and 53C; and Land Transfer Act 2017, ss 75 and 103.
11 Bathurst Resources Ltd v L&M Coal Holdings Ltd, [2021] NZSC 85, [2021] 1 NZLR 696 at [43] citing Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60]–[63]; and Bathurst Resources Ltd v L&M Coal Holdings Ltd, at [116(d)].
-any amounts that it has paid or may in the future pay; and
-any amounts that it is or becomes liable to pay,
to any person at your request or direction, or on your behalf;
• (to the maximum extent permitted by law) any debt or liability to a Secured Party on your part that is reasonably likely to arise at a future date, and that is connected with something that happens while this mortgage is in force; and
• all money you now or in the future Owe under a right or claim against you which a Secured Party has taken over, or at any future date takes over, from somebody else. To the maximum extent permitted by law, this will be the case even if your obligation to pay that money was unsecured before the Secured Party took over the right or claim.
Where there is more than one of you, the Secured Money includes amounts Owed by any one or more of you and amounts Owed by all of you.
[42] “Secured Party” as used in this definition is defined to include any transferee of the Mortgage, and so includes “WAG”. “Owe” in relation to money means to owe that money or be liable to pay that money.
Meaning of “you”
[43] Much of the argument before me centred on the meaning of “you” as it is used in cl 1.2.
[44] It is clear from the terms of the Mortgage that “you” refers to the registered proprietors of the Property. They are the mortgagor. That is made explicit in cl 1.1 of the Mortgage which provides that “… you, as the mortgagor, … mortgage all of your estate and interest in the Land …”.12
[45] The registered proprietors of the Property in this case are Mr Lobb, Ms Ryan and Lockhart. The Property was vested in them as trustees subject to the terms of the
12 This interpretation is also consistent with the Supreme Court’s decision in Westpac New Zealand Ltd v Clark [2009] NZSC 73, [2010] 1 NZLR 82 which included the interpretation of clauses of a Westpac mortgage in near identical terms to the current mortgage. The Supreme Court said that the word “you” was plainly addressed to the registered proprietor, and the definition of Secured Money referred to all the money which the registered proprietor owed to Westpac (at [45]).
Trust deed. In the context of this case therefore, the word “you” refers to the registered proprietors acting in their capacity as trustees. Money owed in the capacity as a trustee of the Trust is expressly included within the definition of “Secured Money” by cl 5.13 of the Mortgage.
[46] Mr Thompson, for the receiver, submits that “you” only refers to the registered proprietors of the Property acting in their capacity as trustees, and it does not include Mr Lobb’s personal debts. However, Mr Latton submits that “you” is wide enough to include monies owed by Mr Lobb acting alone and in his personal capacity.
[47] I agree with Mr Latton that the words used in the Mortgage suggest that “you” captures both joint and several debts and obligations. That flows from the final clause of the “Secured Money” definition which provides:
Where there is more than one of you, the Secured Money includes amounts Owed by any one or more of you and amounts Owed by all of you.
[48] It is also consistent with the definition of “Bank Document” in the Mortgage which means a document or agreement:
… under which obligations arise or are intended to arise from any one or more of you and/or any Guarantor to the Secured Parties, in each case whether or not other parties are involved or it arises as a result of an assignment or transfer. It includes the mortgage.
[49] However, the fact that “you” is capable of capturing joint and several obligations does not mean that Mr Lobb’s personal indebtedness is captured in this case. The money owed by Mr Lobb to WAG is not a joint and several debt owed by the registered proprietors of the Property to WAG. Indeed, the registered proprietors of the Property do not owe any money or obligation to WAG at all. The WAG loan does not impose any obligations on the registered proprietors or the trustees of the Trust and there was no consent by the registered proprietors or the receiver to the Mortgage being used to secure Mr Lobb’s personal debt in this case.
[50] The plain meaning of “you” does not capture monies owed by Mr Lobb to WAG in this case.
Past advance
[51] There is another reason why “Secured Money” does not capture the WAG loan to Mr Lobb in this case. The advance to Mr Lobb was not made “now or in the future” as referred to in the first sentence of the Secured Money definition. In fact, it was not made pursuant to the Mortgage at all.
[52] That follows from the flow of funds outlined in Mr Warwick Lobb’s affidavit and the terms of the deed between Westpac and WAG. The money flowed from WAG to Mr Lobb and from Mr Lobb to Westpac. It was only once Westpac had received the money that it transferred the Mortgage to WAG. The money advanced from WAG to Mr Lobb was accordingly a past advance falling outside the scope of the Mortgage.
[53] This provides a partial response to Mr Latton’s reliance on the first bullet point of the definition of Secured Money. That bullet point provides that Secured Money includes:
all further advances by way of financial accommodation (as defined in section 93 of the Property Law Act 2007) to you
[54] Financial accommodation in s 93 of the PLA captures “further advances” made:
(a)to the mortgagor or “any other person”;13 and
(b)to pay amounts to meet indebtedness secured by the mortgage whether directly or by way of guarantee, and whether advanced to the mortgagor or some other person.14
[55] On their own, the definitions in (a) and (b) above appear to be broad enough to cover the payments made by WAG to Mr Lobb. However, the sections do not stand alone. They are qualified by “further advance” and “you”. As discussed at [52], the loan to Mr Lobb was not a “further advance”. Moreover, it was not made to the registered proprietors (“you”) whether by way of financial accommodation or at all.
13 Property Law Act, s 93(a).
14 Section 93(b).
[56] The third bullet point in the “Secured Money” definition does not assist Mr Lobb and WAG either. That bullet point provides that Secured Money includes:
all amounts needed to reimburse a Secured Party for:
-any amounts that it has paid or may in the future pay; and
-any amounts that it is or becomes liable to pay,
to any person at your request or direction, or on your behalf;
[57] This sub-clause relates to monies paid by the Secured Party at the request, or on behalf, of the registered proprietors of the Property. However, WAG has not paid any money at the request of the registered proprietors or on their behalf. The only money paid was to Mr Lobb. Similarly, to the extent this clause captures the monies advanced by Mr Lobb to Westpac, those monies were not advanced on behalf of the registered proprietors either. They were payments made on his own behalf as they discharged his personal liability (and that of Ms Ryan) to Westpac.
[58] It follows from this construction of the Mortgage that it does not secure the advances from WAG to Mr Lobb. That result accords with common sense. Adopting Mr Lobb and WAG’s interpretation would mean that Mr Lobb (acting alone and having been relieved as a trustee) could commit the Trust property to being used as security for personal lending without the consent of the registered proprietors, trustees, or receiver. That would not only be a surprising result in the circumstances, but one at odds with fundamental principles of mortgage and trust law.
[59] Despite this conclusion, WAG’s interests are not left completely unprotected. The sum of $1.4 million is to be deducted from the proceeds of sale of the Property. This represents the sum paid to discharge Mr Lobb and Ms Ryan’s liability to Westpac. Although it is not said so explicitly, the clear inference is that it would be used to substantially reduce the WAG indebtedness.15
15 See Judgment, above n 1, at [53] and [173].
[60] To sum up, the Mortgage does not secure WAG’s loan to Mr Lobb and it does not secure any other obligations of the registered proprietors or any other person. Declarations to that effect are made at the conclusion of this judgment.
Should the Court order the discharge of the Mortgage?
[61] In addition to declarations, the receiver also seeks an order discharging the Mortgage, or, in the alternative, an order requiring WAG to take all necessary steps to discharge the Mortgage.
[62] In Country Hospitality Management (NZ) Ltd v McCullough, Woodhouse J made an order which had the same effect as a duly executed mortgage discharge instrument under s 83 of the PLA.16 Woodhouse J considered the source of the jurisdiction to make such an order was either s 111 of the PLA, or the court’s inherent jurisdiction.17 This decision was followed in Re Far North District Council.18
[63] Both judgments followed hearings on the papers and there was no appearance by the respondents. It appears that the defendants in Country Hospitality had failed or refused to provide a discharge of the mortgage pursuant to s 83 of the PLA.19 In Re Far North District Council, a discharge of the mortgage was provided, but it was never registered and could not be found.20
[64] The circumstances in this case are somewhat different. Although WAG’s conduct post-hearing (canvassed at [33] to [34]) leaves me a little wary, I nevertheless consider WAG should be afforded an opportunity to file a discharge of the Mortgage under s 83 of the PLA. Orders in those terms are set out at the end of this judgment.
Should a stay be granted pending appeal?
[65] Mr Lobb applies for a stay of certain orders made in the Judgment pending determination of his appeal. The orders he seeks to stay are those relating to vacant
16 Country Hospitality Management (NZ) Ltd v McCullough [2012] NZHC 818.
17 At [7].
18 Re Far North District Council [2021] NZHC 329.
19 Country Hospitality Management (NZ) Ltd, above n 16, at [3].
20 Re Far North District Council, above n 18, at [6].
possession and sale of the Property; the transfer of the sale proceeds; and the value of the antique furniture.
[66] The application falls to be determined under r 12 of the Court of Appeal (Civil) Rules 2005. The principles relating to a stay are well settled. The Court must balance the successful party’s rights to the fruits of the judgment with the need to preserve the position in case an appeal is successful. Factors to be taken into account in this balancing exercise include:21
(a)whether the appeal may be rendered nugatory by a lack of a stay;
(b)the bona fides of the applicant as to the prosecution of the appeal;
(c)whether the successful party will be injuriously affected by the stay;
(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 interests of justice; and
(h)the strength of the appeal.
[67] An order staying execution may relate to the whole or part of the decision or to a particular form of execution. It may also be subject to any conditions the Court thinks fit, including conditions relating to security for costs.22
[68] Mr Lobb concedes that the proposed appeal does not involve novel or important questions. Nor is there any particular public interest in the appeal. Those factors relied on by the parties are addressed below.
21 Keung v GBR Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [11] citing Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 (HC) at [9].
22 Court of Appeal (Civil) Rules 2005, r 12(4).
Strength of the appeal
[69] The notice of appeal challenges nearly every aspect of the Judgment. The key grounds of challenge concern the Court’s interpretation of cl 2.5(3) of the Trust deed and the decision to exercise the powers under that clause.
[70] A decision on an application for a stay is not the occasion to effectively pre- judge the outcome of the appeal. However, Mr Lobb did not refer me to any authority or point of law which persuades me that the Judgment was wrong or that the appeal is likely to succeed.
[71] Hinton J found that the relevant contributions are those made by the parties during the relationship, being the sums attributed to them in transfers to the Trust.23 The Judge found that the contributions are equal and no third-party contributions or claims are to be taken into account. The Judge’s reasoning for reaching this conclusion is comprehensively set out in the Judgment and addresses each of the arguments Mr Lobb seeks to run on appeal. Mr Lobb has not pointed me to any flaw in that reasoning which would persuade me that the Judge’s interpretation of cl 2.5(3) was in error.
[72] Similarly, Mr Lobb was unable to point me to any authority or principle of law which suggests that the Judge’s decision to proceed to implementation of the Judgment rather than confining herself to a declaration of the meaning of cl 2.5(3) was in error.
[73] The Judge addressed the question of jurisdiction and the ability of the Court to exercise the trustees’ power in some detail in the Judgment.24 She considered there was no realistic delineation between interpretation and application in the case.25 Importantly, the Judge considered that there was no prejudice to Mr Lobb in proceeding with the implementation of the orders.
[74] The desirability of the Court intervening in this case was captured by Hinton J in the Judgment as follows:
23 Judgment, above n 1, at [113] and [167].
24 At [86]–[109].
25 At [93].
[108] While I accept that the Court intervening directly in executing the trust power is an unusual step, this is one of those cases where it is required. The cost and delays to the parties has been vast. There are no trustees currently in office to execute the power. Any trustee would have to be independent and there is no realistic prospect of any suitable trustees accepting office. Without the Court’s assistance, there is no end in sight to the litigation affecting the parties.
[75] The difficulties caused by removal of the trustees might not have been so stark in this case if the receiver had been appointed prior to this proceeding being filed. In those circumstances, it seems likely (with the benefit of hindsight) that this proceeding would have taken the form of an application by the receiver for directions from the Court. While the procedural route would have been different, I have no doubt that the end-result would have been the same.
[76] Overall, I consider the strength of the appeal to be weak. This weighs against the grant of a stay in this case.
Will the appeal be rendered nugatory if no stay is granted?
[77] Mr Latton submits that Mr Lobb (and his father and daughter) do not want to see the Property sold to a third party. Mr Lobb says that if the Property is sold, then Mr Lobb’s ability to advance his claim in respect of contributions to the Property will be lost. In turn, he says that will result in a lost opportunity to buy out Ms Ryan’s share of the Property which will allow Mr Lobb, his father and daughter to remain living there.
[78] I am not satisfied that sale of the Property will render the appeal nugatory. The essence of the challenge to the Judgment concerns the nature of the contributions made to the Property and the effect of that on the division and re-settlement of Trust assets. It does not concern the sale itself.
[79] Furthermore, it is not at all clear to me that Mr Lobb would be able to afford to purchase Ms Ryan’s share even if the appeal was successful.26 In other words, I am
26 Mr Lobb blames Ms Ryan for his inability to find substantial work and for his financial security. The matters canvassed in his affidavit directed to this claim are irrelevant to the application and I do not need to address them any further.
not persuaded that a stay (as opposed to other factors) will deprive Mr Lobb of this opportunity.
[80] In sum, I am not satisfied that the appeal would be rendered nugatory if a stay is not granted.
Will Ms Ryan be injuriously affected by the stay?
[81] Ms Ryan has provided an affirmation in opposition to the stay application describing the negative impact on her from delaying the sale of the Property.
[82] Those adverse effects include the exposure she faces in separate proceedings commenced by Mr Lobb against her for contribution for his repayment of the Westpac debt. The only source of funds to meet that liability is the sale of the Property. Indeed, Hinton J directed that $1.4 million should be deducted from the sale proceeds to meet that liability.27
[83] In addition, Ms Ryan’s evidence is that she is unable to purchase a home or find other accommodation until funds are released from the sale of the Property and other Trust assets. Ms Ryan is currently renting an apartment which she shares with her son. Those funds are also required to meet Ms Ryan’s legal costs in these proceedings and others.
[84] Finally, I accept that the ongoing delay in bringing these proceedings to an end has a significant emotional impact on Ms Ryan which must also be borne in mind.
[85]The negative impact on Ms Ryan weighs against a stay in this case.
What is the impact on Mr Lobb and third parties of not granting the stay?
[86] Mr Lobb says that if a stay is not granted, he will have to vacate the Property and find alternative accommodation for himself, his daughter and his father. He says that his ability to afford new lodgings suitable for all of them is severely constrained by his current financial circumstances.
27 Judgment, above n 1, at [173].
[87] I accept that there will be a measure of inconvenience to Mr Lobb, his father and daughter in finding alternative accommodation. Mr Lobb’s father has health needs that restrict his accommodation options. Mr Lobb’s daughter is a university student and has said she would prefer to live at home. Moving from the former family home is likely to be an emotional and financial wrench for Mr Lobb.
[88] Ms Ryan suggests there are alternatives available, including other residences owned by Mr Lobb’s father. The availability of those options is contested by Mr Lobb and his father. It is not necessary to engage with that dispute because even if these options are not available, I am not persuaded that the impact associated with vacating the Property is sufficient to justify the stay. Mr Lobb has had more than ample time (indeed years) to adjust to the idea of leaving the family home and prepare for that eventuality.
[89] I do not accept that WAG will be adversely affected by the sale of the Property. The Mortgage does not secure the debt owed by Mr Lobb to WAG and so a stay of the order of sale will not affect WAG’s position. Moreover, the sale of the Property will release funds which may be used to discharge Mr Lobb’s debt burden to WAG. That will improve Mr Lobb’s financial circumstances.
[90] The impact on Mr Lobb and family members is not such that a stay should be granted.
Does the balance of convenience and interests of justice favour a stay?
[91] The balance of these factors weighs strongly against the grant of a stay. The position is best summed up by the Court of Appeal in a decision declining leave to appeal a decision of Associate Judge Smith:28
[18] The more significant consideration is the delay that would result from an appeal. It is evident from both Edwards J’s decision and Associate Judge Smith’s decision that virtually no progress has been made towards the resolution of the issues between the parties. Five years after separation, they are still engaged in a number of proceedings, resolution of which is an ongoing cost to both. Had Mr Lobb acceded to the proposal for arbitration in 2017 it is very likely that the issues between the parties, including his contention as to the basis on which resettlement should proceed under cl 2.5, would have
28 Lobb v Ryan [2021] NZCA 224.
been resolved by now. After so long, and given the history of the dispute, the interests of justice make prompt resolution of the substantive proceeding the determinative factor.
[92] The dispute has not substantively progressed towards resolution since this Court of Appeal judgment was delivered. It is in the best interests of all parties that the litigation over the primary Trust asset is brought to an end. That requires the Property to be vacated and sold and Trust assets to be re-settled in accordance with the Judgment. The prospect of a successful appeal is weak and there is no reason to delay matters further. The overall interests of justice do not favour a stay.
Result
[93] The receiver’s application for declarations and orders in relation to the Mortgage is granted.
[94]I make orders:
(a)Declaring that the registered proprietors of the land in Identifier NA52A/1231, with the street address of 23 Orakei Road, Remuera (Property) do not owe any money or other obligation to the third defendant.
(b)Declaring that Mortgage Instrument 9977107.3 of which the third defendant is the registered mortgagee does not secure the repayment of any debt or the performance of any obligation whether of the registered proprietors of the Property or Mr Lobb or at all.
(c)The third defendant shall take all reasonable steps without delay to discharge the Mortgage pursuant to s 83 of the Property Law Act 2007.
(d)Leave is reserved to the receiver to seek further orders from the Court in the event a discharge of the Mortgage is not obtained within a reasonable time.
[95]Mr Lobb’s application for a stay is dismissed.
[96] The receiver and Ms Ryan are both entitled to costs. I urge the parties to endeavour to agree quantum so that further costs may be saved in this dispute. In the event that costs cannot be agreed, short memoranda (no longer than three pages in length) shall be filed and served 10 working days after delivery of this judgment, with memoranda in opposition filed five working days thereafter.
Edwards J
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