Secure Funding Limited v Flying Cross Trust Limited (in liquidation)

[2024] NZHC 2034

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-2404

[2024] NZHC 2034

BETWEEN

SECURE FUNDING LIMITED

Plaintiff

AND

FLYING CROSS TRUST LIMITED

(in liquidation) First Defendant

PETER RAYMOND KERR
Second Defendant

GLENN MICHAEL SOROKA

Third Defendant

Hearing:

On the papers

Counsel:

W D Hofer / K R McNicholas for the Plaintiff

E C Gellert for the Liquidators of the First Defendant Third Defendant in person

Judgment:

25 July 2024

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 25 July 2024 at 10 am.

Pursuant to Rule 11.5 of the High Court Rules.

…………………..

Registrar/Deputy Registrar

Solicitors/Counsel: Tompkins Wake, Auckland Lowndes Jordan, Auckland

SECURE FUNDING LTD v FLYING CROSS TRUST LTD [2024] NZHC 2034 [25 July 2024]

Introduction

[1]        On 12 December 2023, I granted summary judgment to the plaintiff, Secure Funding Ltd, as mortgagee, entitling Secure Funding to possession of the property at 58 Old Barn Road, Papakura (the property).

[2]        On 26 June 2024, the third defendant, Mr Soroka, filed a memorandum seeking an “interim stay of  the  eviction”.  Mr  Soroka  is  self-represented.  In  substance, Mr Soroka seeks to set aside the summary judgment.

[3]        Mr Soroka says that he occupied the property pursuant to a residential tenancy agreement, and s 58 of the Residential Tenancies Act 1986 (the Act) requires Secure Funding, as mortgagee, to terminate the tenancy in accordance with the Act.

Procedure

[4]        On 3 July 2024, I directed that Mr Soroka’s application be treated as an application to set aside the summary judgment made under r 12.14 of the High Court Rules 2016 (HCR). I made further directions in respect of the application:

(a)the memorandum of counsel for the plaintiff dated 2 July 2024 shall be treated as its notice of opposition to Mr Soroka's application to set aside the judgment;

(b)the plaintiff shall file and serve any affidavits in support of its opposition by 12 July 2024;

(c)Mr Soroka shall serve his application and supporting affidavit on the liquidators of Flying Cross Trust Limited (in liquidation) [the registered owner and the first defendant] by 5 July 2024;

(d)if Flying Cross Trust Limited (in liquidation) wishes to be heard in respect of Mr Soroka's application, it shall file and serve a notice of opposition and any supporting affidavits by 12 July 2024;

(e)Mr Soroka shall file and serve any affidavits in reply by 19 July 2024;

(f)any party may apply for an urgent fixture, by filing an interlocutory application and a supporting affidavit, by 12 July 2024; and

(g)if no application for an urgent fixture is filed by 12 July 2024, then the application shall be set down for a half-day fixture on the next available date.

[5]Since my minute dated 3 July 2024:

(a)Mr Soroka has filed a memorandum (incorrectly dated 26 June 2024) regarding the state of the property;

(b)Secure Funding has filed a memorandum dated 4 July 2024 in response;

(c)counsel for the liquidators of Flying Cross Trust Limited (in liquidation) (FCTL) has filed a memorandum dated 12 July 2024 setting out substantial background to this matter;

(d)Mr Soroka has filed an application dated 15 July 2024 for an urgent hearing of his application to set aside the judgment;

(e)Secure Funding has filed an affidavit dated 18 July 2024, and submissions of counsel dated 19 July 2024; and

(f)Mr Soroka has filed an affidavit and submissions dated 24 July 2024.

[6]        Having carefully reviewed the various documents filed by the parties, I am satisfied that Mr Soroka’s application to set aside the summary judgment does not require a fixture. It can be dealt with on the papers.

Analysis

[7]        FCTL remains the registered owner of the property, as trustee of the Flying Cross Trust. The liquidation of FCTL means that it can no longer act as a trustee of the Flying Cross Trust, and its continued ownership of the property is as bare trustee. The nature of FCTL’s rights and obligations as bare trustee have yet to be determined by a court.1

[8]         Mr Soroka says that a new trustee of the Flying Cross Trust, FCT Trustee Ltd, granted a residential tenancy to him and another person, by an agreement dated      28 September 2023. On 11 June 2024, the Tenancy Tribunal declared that the agreement did not create a valid residential tenancy agreement.

[9]         Mr Soroka now relies on a purported residential tenancy agreement dated     1 April and 30 May 2024, also asserted to create a residential tenancy granted by FCT Trustee Ltd to Mr Soroka and another person. Mr Soroka has also produced an undated document which purports to appoint Mr Soroka as a trustee of the Flying Cross Trust, together with FCT Trustee Ltd.

[10]      Counsel for the liquidators of FCTL has drawn my attention to a Tomlin Order and a freezing order made on 2 August 2021, enforcing a settlement agreement between Mr Soroka and his former defacto partner dated 1 August 2021.

[11]Under the settlement agreement:

(a)Secured Funding’s rights as mortgagee are not affected;

(b)various obligations are imposed on the trustee of the Flying Cross Trust;

(c)it is contemplated that the  property  will  be  sold,  and  FCTL  and Mr Soroka are obliged to use their best endeavours to ensure the property is presented in a manner to achieve maximum value.

1      Soroka v Meredith [2023] NZHC 2510 at [35], [42] and [46].

[12]      The freezing order prevents FCTL from transferring or further encumbering the property.

[13]      If FCT Trustee Ltd was validly appointed as the new trustee of the Flying Cross Trust, then FCT Trustee Ltd will have acquired its interest in the property subject to the obligations imposed on the trustee of the Flying Cross Trust in respect of the property. Both FCTL (as bare trustee) and FCT Trustee Ltd (as the new trustee) are obliged to comply with the Tomlin order and the settlement agreement.

[14]      The purported tenancy agreement dated 1 April and 30 May 2024 was entered into after I had made an order granting possession of the property to the plaintiff. Therefore, FCT Trustee limited had no right to possession at the time it purported to grant a right of possession to Mr Soroka.

[15]      FCTL as registered owner has not consented to the granting of any tenancy agreement to Mr Soroka.

[16]      I am satisfied that FCT Trustee Ltd had no right or ability to grant a residential tenancy agreement in respect of the property when it purported to do so on 1 April or 30 May 2024. There is no basis to set aside the order for possession in favour of Secure Funding made on 12 December 2023.

Orders

[17]I rescind the direction in paragraph [11(g)] of my minute dated 3 July 2024.

[18]      Mr Soroka's application to set aside or vary the summary judgment dated    12 December 2023 is dismissed.

[19]      If the parties are unable to agree on costs, any party seeking costs may file a memorandum within 10 working days of this judgment, and I will then make further directions for determination of costs.

Associate Judge Brittain