Tukuafu v Glenfield Investments Limited HC Auckland CIV 2010-404-6628

[2010] NZHC 1946

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-006628

BETWEEN  KENNETH GEORGE TUKUAFU Plaintiff

ANDGLENFIELD INVESTMENTS LIMITED First Defendant

ANDSTANDARD MORTGAGE TRUST LIMITED

Second Defendant

Hearing:         5 October 2010

Counsel:         T J Herbert for Plaintiff

A R Gilchrist for Defendants

Judgment:      5 October 2010

JUDGMENT OF ASHER J

Solicitors:

T J Herbert, Level 13 Shortland Chambers, 70 Shortland Street, Auckland 1010. Email:  [email protected]

A R Gilchrist, PO Box 5444, Wellesley Street, Auckland 1141, DX CP24003. Email:  [email protected]

KENNETH GEORGE TUKUAFU V GLENFIELD INVESTMENTS LIMITED AND ANOR HC AK CIV-

2010-404-006628  5 October 2010

[1]      It  is  now  just  after  5pm.    At  approximately  3.45pm  this  afternoon  this application for a without notice interim injunction was filed.  The papers were given to me.  Mr Herbert who appears for the plaintiff was downstairs.  He had served the draft papers on the first defendant’s counsel Mr Gilchrist at approximately 1pm this afternoon.   I asked the Registrar to contact Mr Gilchrist, who was on standby, to attend a short hearing on a Pickwick basis.   He has done so.   I expressed my appreciation to counsel for attending on short notice, and particularly Mr Gilchrist for his careful and responsible submissions in difficult circumstances.

[2]      The application is for an interim injunction to stop a mortgagee sale of a property owned by Noelene Tukuafu.  The plaintiff is her Court-appointed property manager, her son Kenneth George Tukuafu.   The pleadings in very general terms allege that two mortgages on the property to the first and second defendant were obtained through fraud.  The first defendant has served a Property Law Act notice and there is to be a mortgagee sale at 9.35am tomorrow.   The first mortgagee, Glenfield Investments Ltd, has issued a Property Law Act notice that shows that

$446,630 was owing as at 12 July 2010.

Serious question to be tried

[3]      Mrs Tukuafu is 81 years old.  There are reports on the file indicating a strong probability of the onset of dementia.  The indications are that her mental functions are significant diminished.

[4]      The relevant mortgages were signed in 2008.  The papers raise questions (and I put it no more strongly than this) as to whether she actually signed some of the relevant mortgage papers.  There is an indication that her passport that was available at the time had been altered to understate her age.  Of most significance is the fact that the title search attached to Mr Tukuafu’s affidavit indicates that the property was mortgage free before these very significant mortgages were executed in 2008.  It is difficult to see how legitimate mortgages could be created in those circumstances.

[5]      Mr Gilchrist has shown me copies of sworn affidavits for the defendants which I have only had a chance to briefly skim.  They indicate on their face a lawful

and properly conducted mortgage transaction where Mrs Tukuafu was accompanied and guided throughout by her daughter Adele Tukuafu.  Mr Gilchrist has handed me a copy of a settlement statement which indicates that the 2008 mortgages may have been a refinancing transaction.   This is not supported by the title documents.   I accept, however, that it is entirely possible that this was a legitimate transaction from the point of view of the defendants where they have acted throughout in good faith and are entitled to the protection of s 183 of the Land Transfer Act 1952.

[6]      However, I am satisfied that the modest threshold of a serious question to be tried has been crossed on these papers.

Balance of convenience

[7]      The mortgagee sale is set down for tomorrow.  There will undoubtedly be a cost and inconvenience in its postponement.

[8]      Mr Gilchrist observes that Mrs Tukuafu is not living in the house at the moment as she is with her children in Australia.  However, Mr Herbert points out that that arrangement is temporary and this is her home.  In the papers that I have been shown there is an assessment of the value of the property at $600,000.  On a mortgagee sale it would be $510,000.

[9]      Three  matters  relevant  to  the  balance  of  convenience  emerged.    Firstly, Mrs Tukuafu will lose her home should the mortgagee sale proceed.   Secondly, approximately $90,000 worth of value in the house will be lost if the mortgagee sale proceeds.  Thirdly, in the event (probably unlikely) that the defendants are not able to meet a damages award, Mrs Tukuafu could lose the equity in her home should she not receive some injunctive relief.

[10]     As against this there is the costs of sale that will be lost if the auction tomorrow is cancelled.  Mr Gilchrist estimates that cost at $10,000 and there will be further interest that will accrue.  However, as against this, on a sale of $510,000 and with the mortgage principal and outstanding penalty interest being approximately

$470,000, there is some modest equity available to meet the defendants’ losses should they be ultimately successful.

Delay

[11]     Normally there would be a question in relation to a mortgagee sale like this filed at the last minute, as to why there had been such delay, and this would work against the granting of an injunction.   However, there is at least a prima facie explanation for this given Mrs Tukuafu’s poor mental condition and her son’s evidence that he has only recently fully discovered and understood the position, and has only recently been appointed by the Court as property manager.

[12]    This without notice injunction must, however, be on terms enabling the defendants to apply to have the orders rescinded.   Should such an application be made, the Court should make a half day fixture available as soon as possible.   I propose to acceding to Mr Gilchrist’s proposal (not contested by Mr Herbert) that the plaintiff should pay the wasted cost of sale estimated at $10,000 into Court.

Orders

[13]     I therefore make the following orders:

a)        Until further order of the Court, the defendants or their agents are restrained from selling or procuring the sale of the property known as

136 Kimpton Road, Papatoetoe, Auckland;

b)Leave is reserved to the defendants to apply to the Court to discharge or vary order (a) on three working days’ notice;

c)        The plaintiff is to pay the estimated wasted costs of sale of $10,000 into the Court by 5pm on Friday, 8 October 2010; and

d)       Costs are reserved.

……………………………….

Asher J