Stokes v Gold Band Finance Limited

[2016] NZCA 442

IN THE COURT OF APPEAL OF NEW ZEALAND

CA622/2015
[2016] NZCA 442

BETWEEN	COLIN PETER STOKES First Applicant
GREGORY ROBERT SMITH Second Applicant
AND	GOLD BAND FINANCE LIMITED Respondent

Hearing:	12 September 2016
Court:	Wild, French and Brown JJ
Counsel:	First Applicant in person Second Applicant in person C R Vinnell for Respondent
Judgment:	16 September 2016 at 2.30 pm

JUDGMENT OF THE COURT

AThe application for an extension of time under r 43 of the Court of Appeal (Civil) Rules 2005 is declined.

BThe applicants must pay the respondent costs as for an application for leave to appeal on a band A basis together with usual disbursements.

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REASONS OF THE COURT

(Given by French J)

Introduction

1. Messrs Stokes and Smith (the applicants) wish to appeal a decision of Associate Judge Osborne delivered in the High Court at Christchurch.[1]  The notice of appeal was filed on 27 October 2015.  Under r 43 of the Court of Appeal (Civil) Rules 2005 the applicants were required to file a case on appeal and seek a fixture date by 19 February 2016.  They failed to do so and accordingly by virtue of r 43 the appeal was deemed abandoned.  On 13 May 2016 they applied for an extension of time in order to be able to revive the appeal under r 43(2).

Background

[1]Gold Band Finance Ltd v Philpott [2015] NZHC 2383. Mr Philpott, who was a respondent together with Mr Stokes and Mr Smith in the High Court, abandoned the proposed appeal prior to the hearing of this application.

1. The proceedings concern a Christchurch subdivision developed by Noble Investments Ltd (Noble).  Noble had sold lots in advance of the subdivision to various purchasers, including the applicants.  The respondent, Gold Band, provided finance to Noble secured over the titles still held by Noble. 

2. After Gold Band’s mortgage was registered the applicants lodged caveats over land secured by the mortgage, which they claimed was affected by Noble’s undertaking to provide them with access and services.[2]  Subsequently, Noble defaulted on the loan and Gold Band sought to exercise its powers of mortgagee sale.  It applied for an order removing the caveats on the ground it had priority over the interests protected by the caveats.

   [2]In a series of judgments Associate Judge Osborne had held the applicants did have caveatable interests in the land: Philpott v Noble Investments Ltd [2012] NZHC 1431; Philpott v Noble Investments Ltd [2013] NZHC 400 (caveatable interests upheld in Court of Appeal but appeal allowed on other grounds: Philpott v Noble Investments Ltd [2015] NZCA 342).

3. In the High Court the applicants argued Gold Band had lost the right to rely on its priority because it had consented to their interest in the land and because it was arguable Gold Band had assisted subordinate parties to defeat those interests.  This latter argument concerned a security sharing deed entered into between Gold Band, Noble and a utility service provider called Delta.

4. Associate Judge Osborne found against the applicants on all grounds.  The Associate Judge ordered the applicants’ caveats to be removed.

5. The applicants then filed this appeal and sought a stay of the High Court decision.  In a subsequent judgment delivered on 22 July 2016 Associate Judge Osborne refused to grant a stay.[3]  The caveats were duly removed and the mortgagee sale proceeded.  Settlement of the mortgagee sale took place on 24 August 2016.  All relevant titles have now been transferred to the purchaser.

The delay in prosecuting the appeal

[3]Gold Band Finance Ltd v Philpott [2016] NZHC 1674.

1. The period of delay is significant.  The applicants have various explanations for the delay, principally that they were preoccupied with the then pending mortgagee sale and attempts to settle the dispute.  They say too they were fearful of the possibility of a damages award being made against them.  None of those explanations is satisfactory.  Having filed the notice of appeal, it was the applicants’ obligation to prosecute the appeal diligently.  They have not done so and indeed at one point even advised Gold Band they had decided to abandon the appeal.  The case on appeal has still not been filed and timetabling directions for this application were breached.

2. The delay has caused Gold Band prejudice.

The merits of the appeal

The applicants’ arguments

1. The applicants acknowledge that, due to settlement of the mortgagee sale, the appeal has now been rendered nugatory in respect of their personal interests in the caveated properties.  However, they contend it is in the public interest for this Court to correct a decision that they contend “legalises what is not legal,” namely the dealings between Gold Band, Delta and Noble.

2. According to the applicants, the security sharing agreement was a fraudulent device designed by Gold Band, Delta and Noble to defeat the applicants’ interests.  It enabled Gold Band to remain on the title as the registered first mortgagee despite the fact Delta was really the true  mortgagee and making all the decisions, including directing Gold Band not to deal with the applicants.  The applicants say further that the arrangements between Delta, Noble and Gold Band amounted to a partial assignment of a mortgage in breach of s 84 of the Property Law Act 2007 and s 97 of the Land Transfer Act 1952.  The applicants also rely on s 102 of the Property Law Act, which they contend was breached when Delta rebuffed their requests to redeem the mortgage.

3. Arguments about the statutory provisions now being relied upon were not raised at the hearing before Associate Judge Osborne and therefore are not addressed in the decision under appeal.[4]  The applicants submit, however, it would be in the public interest for this Court to give a ruling on them.

Our view

[4]They were raised at the stay hearing.

1. At this stage it is impossible for us to assess the strength of the new arguments being advanced.  However, it is well established that the Court’s role is not to give advisory opinions, which is effectively what the applicants are seeking.  The proper vehicle for the applicants to raise the arguments is in another proceeding they have issued in the High Court against Noble and in respect of which they have applied to join Gold Band and Delta.

2. The removal of the caveats and the settlement of the mortgagee sale have rendered this appeal of no practical value.

3. That combined with the unsatisfactory delay persuade us it would not be in the interests of justice to grant an extension of time.

Outcome

1. The application for an extension of time under r 43(2) is declined.

2. There is no reason to depart from the ordinary rule that an unsuccessful party must pay the costs of the successful party.  The applicants are therefore ordered to pay the respondent costs as for an application for leave to appeal on a band A basis together with usual disbursements.

Solicitors:
Duncan Cotterill, Christchurch for the Applicants
Anthony Harper, Christchurch for Respondent