Watson v Williams
[2012] NZHC 3321
•10 December 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-5994 [2012] NZHC 3321
UNDER the Judicature Act 1908
IN THE MATTER OF recovery of land from an unlawful occupier
- Part 13, Schedule 2 of the Judicature Act
1908
BETWEEN ROHAN THEODORE WALTER WATSON, KELLY MAREE WATSON AND NAPIER INDEPENDENT TRUSTEES LIMITED AS TRUSTEES OF THE STAR TRUST
Plaintiffs
ANDGLYNIS RUTH WILLIAMS AND SHAINE FREDRICK WILLIAMS Defendants
Hearing: 6 December 2012
Counsel: BW Morley for plaintiffs
Appearance: SF Williams, second-named defendant in person
Judgment: 10 December 2012
JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for stay]
Solicitors: Hesketh Henry, Private Bag 92 093, Auckland
And To: GR & SF Williams, 40 Mayall Avenue, Beachhaven
WATSON V WILLIAMS HC AK CIV-2012-404-5994 [10 December 2012]
Contents
The application ......................................................................................................... 3
The judgment ........................................................................................................... 3
The grounds in support............................................................................................. 3
The Court’s approach to a stay application .............................................................. 4
Background .............................................................................................................. 5
The notice of appeal ................................................................................................. 5
Consideration of the factors relevant to a stay ......................................................... 6
The defendants’ request that I recuse myself from hearing the say application .... 10
Conclusions ............................................................................................................ 10
Costs ....................................................................................................................... 10
The application
[1] The defendants apply for an order that the judgment I delivered on
29 November 2012 be stayed pending an appeal to the Court of Appeal.
[2] Although the application refers to r 24.10 of the High Court Rules 2008, Mr Williams confirmed to me that the application was in fact made in reliance on r 12 of the Court of Appeal (Civil) Rules 2005. I proceed on that basis. Part 24 clearly has no application as that part deals with insolvency matters.
The judgment
[3] My judgment ordered that the defendants vacate the property at 40 Mayall Avenue, Beachhaven and pay damages and costs. The plaintiffs were the purchaser from the defendants’ mortgagee. The defendants fell into default under the mortgage. A mortgagee sale took place.
The grounds in support
[4] The grounds in support of the application in summary are that: (a) An appeal has been filed;
(b) It is just that a stay be granted;
(c) The appellants have good grounds for an appeal;
(d) The balance of convenience favours the granting of a stay; and
(e) I should recuse myself from hearing this appeal as it is my judgment that is the subject of the appeal.
The Court’s approach to a stay application
[5] The application is made in reliance on r 12 of the Court of Appeal (Civil) Rules 2005. Of particular significance are subrules 3 and 4 which provide:
(3) Pending the determination of an application for leave to appeal or an appeal, the court appealed from or the Court may, on application,—
(a) order a stay of the proceeding in which the decision was given or a stay of the execution of the decision; or
(b) grant any interim relief.
(4) An order or a grant under subclause (3) may—
(a) relate to execution of the whole or part of the decision or to a particular form of execution:
(b) be subject to any conditions that the court appealed from or the Court thinks fit, including conditions relating to security for costs.
[6] I am required to balance two principles. First, a successful litigant should not be deprived of the fruits of his or her litigation. Second, an appellant should not be deprived of the fruits of a successful appeal: Duncan v Osborne Building Ltd.[1]
[1] Duncan v Osborne Building Ltd (1992) 6 PRNZ 85 (CA) at 87.
[7] However, in balancing the two principles, the Courts have considered a number of matters. They include:
a) Whether, if no stay is granted, the appellant’s right of appeal will be
rendered nugatory;
b) Whether the successful party will be injuriously affected by the stay; c) The bona fides of the applicants as to the prosecution of the appeal; 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 the status quo; and
h)Whether the appellant has demonstrated a sufficiently arguable point to be considered on appeal.
Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd and Videbeck v Auckland City Council.[2] The above factors were cited with approval by the Court of Appeal in Keung v GBR Investment Ltd together with an additional factor, namely the apparent strength of the appeal.[3]
Background
[2] Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 at [9],
Videbeck v Auckland City Council HC Auckland M 1053-sw02, 21 October 2002 at [7].
[3] Keung v GBR Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [11].
[8] The background to this case is set out in [13] to [24] of my judgment.[4] I
adopt that summary and therefore do not repeat it.
The notice of appeal
[4] Watson, v Williams [2012] NZHC 3199.
[9] Because the application for stay did not set out the specific grounds to be advanced on the appeal I invited Mr Williams to let me have a copy of his notice of appeal, which he duly gave me. His grounds of appeal are set out in paragraph 1.1 of that document as follows:
(a) The respondents were plaintiffs in a claim seeking recovery land from an unlawful occupier pursuant to Part 13, Schedule 2 of the Judicature Act 1908, an order that they are entitled to land and order for vacant possession within one week of judgment, damages and costs
(b) The appellants were defendants who said that they were lawful occupiers as they had a valid residential fixed term tenancy from the purchaser they had solicitor the subject property to on 14 February
2012, and that even if summary judgement could issue from the
High Court the possession order lay solely in the jurisdiction of theTenancy Tribunal.
(c) His honour Associate Judge Faire gave summary judgment in favour of the plaintiffs on all matters.
(d) The Court erred by being drawn into the merits of the competing claims, which contained disputed facts when the sole task of the Court was to decide whether the appellants had no defence. The Judgement is contrary to the principles of summary judgement set down in paragraphs [9] to [11] of the Judgement. In particular the Court erred by :
(e) Summarily determining the defence against the appellants by holding that their sale and purchase agreement signed on
14 February 2012 did not prevent the mortgagee from reselling the same property at mortgagee sale.
(f) Summarily determining the defence against the appellants by holding that the matter does not lie in the jurisdiction of the Tenancy Tribunal under section 58(2) of the Residential Tenancies Act 1986.
(g) Summarily determining the defence against the appellants by holding that the jurisdiction of the Tenancy Tribunal only applies to disputes between Land lords and Tenants thereby disregarding sections 77(3) and 65(3) of the Residential Tenancies Act 1986.
(h) Summarily determining the defence against the appellants by holding that a mortgagor may not sell a mortgaged property without the permission of the mortgagee.
(i) His Honour also erred in law in that the effect of a mortgage was to give the mortgagee an interest in the realty and hence possession, rather than an interest the personalty that is a chattel charge only.
(j) His Honour erroneously disregarded the effect of Section 11(1)(c) Second Schedule of the Property Law Act 2007 that sets out the remedy of the mortgagee when a mortgagor has sold the mortgaged land without the permission of the mortgagee.
Consideration of the factors relevant to a stay
[10] I consider the first matter, namely whether the appeal would be rendered nugatory by the lack of a stay. The short answer to this question is that it would not. If a stay is refused the defendants will have to vacate the property and the plaintiffs, pursuant to the judgment, will take possession of the property. If the judgment is reversed on appeal then there would simply be a vacation of the premises by the plaintiffs and a retaking of possession by the defendants. This issue accordingly does not assist the defendants/applicants.
[11] The next consideration is whether the plaintiffs would be injuriously affected if a stay was ordered. The evidence here is that the plaintiffs, together with their family, have had to move into rental accommodation because of the refusal of the defendants to yield possession. They have been placed in a position of having to pay a mortgage which they raised to purchase the subject property and, in addition, are required to pay rent at the rate of $700 per week. That, in itself, is a considerable financial burden. Since the judgment, they have given notice vacating their residential accommodation. They will therefore be left without anywhere to live.
[12] The defendants’ position disclosed that they may be able to obtain accommodation with family and friends in Auckland. I do not doubt that the loss of their home, because of other circumstances is, and will be, a substantial hardship to the defendants and their family. Mr Williams, in his submissions to me, outlined the very difficult circumstances that he faced arising from a leaky home problem and the lack of any party from whom he could seek recompense when he attempted to remedy the damage caused by the water ingress. He also spoke of difficulties he had faced in his business: all of which had imposed, he said, a substantial financial burden on him and his family. As sad as that position is, it nevertheless discloses that in all probability if I granted the stay and the appeal was unsuccessful, then the plaintiffs would be left without any effective recovery for the costs that undoubtedly they are incurring by being kept out of possession of this property. The plaintiffs’ purchase of the property was for the purposes of a family home. Accordingly, that leads me to the conclusion that if a stay was granted it will have an injurious effect on the plaintiffs and, in particular, will lead to losses which, from a practical point of view, will probably be unable to be recovered from the defendants.
[13] The comments that I have already made favour the refusal of the stay when considering the balance of the matters that are referred to in [3] of this judgment. It is appropriate, however, that I refer to the merits of the case on appeal.
[14] The first matter to be considered is whether or not there were disputed facts. The essential facts that I have outlined in the judgment were not disputed. What the defendants sought to raise was a dispute concerning the legal effect of the sale of the property by the mortgagee together with the legal effect of the purported sale by the
defendants to Ms Lambert and the tenancy that she is alleged to have created. The approach to a summary judgment application, referred to by the Court of Appeal in Krukziener v Hanover Finance Ltd, was referred to and applied by me in the analysis of this case.[5] I therefore reject that there were any disputed facts that stood in the way of the matter being dealt with on a summary judgment application.
[5] Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26].
[15] The next point raised by the defendants is that I did not allow a defence which the defendants say was available, namely that the sale and purchase agreement of 14 February 2012 prevented the mortgagee from selling the property at a mortgagee sale. I dealt with this question at [42] and following of the judgment. It would be apparent to the readers of the judgment that I cited authorities for the proposition concerning the effect of registration.[6] In FM Custodians Ltd v Stewart
[6] Watson v Williams [2012] NZHC 3199 at fn 17.
Street Properties Ltd (in rec) at [13] – [16] I recorded:[7]
[7] FM Custodians Ltd v Stewart Street Properties Ltd (in rec) HC Auckland CIV-2011-404-7181,
2 December 2011 at [13]–[16].
[13] In Westpac Banking Corporation v Famularo I had to deal with a similar issue to that which arises in this case.[8] I recorded at paragraph 6:
[8] Westpac Banking Corporation v Famularo HC Auckland M1092/98, 23 September 1998.
What then is in issue is whether the interest acquired by Mr Famularo under his sale and purchase contract overrides the rights of the mortgagee and in particular, the right to effect the sale where a default has occurred. The short answer is, they cannot. The authority for that proposition is contained in the decision of McGechan J in National Mutual Finance (1988) Ltd v Berryman (High Court Wellington M451/91,
2 October 1991) and in the unreported decision in the Court of Appeal in Jensen v Jensen, Charles Aston Ltd & Anor (CA 246/90, 30 December 1990).
[14] The registered mortgagee’s title is paramount. That includes the mortgagee’s right to exercise its power of sale.[9]
[9] Congregational Christian Church of Samoa Henderson Trust Board v Broadlands Finance Ltd
[1984] 2 NZLR 704.
[15] Section 105 of the Land Transfer Act 1952 provides:
105 Transfer by mortgagee
Upon the registration of any transfer executed by a mortgagee for the purpose of [exercising a power of sale over any land], the estate or interest of the mortgagor therein expressed to be transferred shall
pass to and vest in the purchaser, freed and discharged from all liability on account of the mortgage, or of any estate or interest except an estate or interest created by any instrument which has priority over the mortgage or which by reason of the consent of the mortgagee is binding on him.
[16] The interest claimed in the caveat asserting an interest as purchaser under a sale and purchase contract has no priority and is entitled to no protection in respect of the registration of any transfer executed by a mortgagee for the purpose of exercising the mortgagee’s power of sale over the land. In short, the registered proprietor’s interest in the land ends with the transfer by the mortgagee to the mortgagee’s purchaser.
The current authorities do not appear to support the defendants’ contention.
[16] The defendants contend, however, that the passing of the Property Law Act
2007 restricts a mortgagee’s powers to rescind sales. Mr Morley drew attention to s 178(2) of the Property Law Act 2007, which appears to be a complete answer to this submission.
[17] The next position raised relates to the jurisdiction of the Tenancy Tribunal. Mr Williams invites a consideration of ss 65(3) and 77(3) of the Residential Tenancies Act 1986. Although the sections were not specifically referred to in my judgment, my view is that they do not override the primary jurisdiction provision that is contained in s 77(1).
[18] Mr Williams’ notice also submits that the mortgage only gives an interest in personalty, which is a chattel charge only. The authorities do not support that proposition. I refer to Plateau Farms Ltd (in rec and liq) v Lambert.[10]
[10] Plateau Farms Ltd (in rec and liq) v Lambert [2012] NZHC 1478 at [13] and [14].
[19] I do not regard any of the grounds advanced by the defendants as strong grounds, although the ultimate determination of the question is for the Court of
Appeal.
The defendants’ request that I recuse myself from hearing the say application
[20] Where an application is filed in the Court appealed from, pursuant to r 12 of the Court of Appeal Rules, the usual position is for the judge whose judgment is subject to the appeal to hear the application for stay. In deciding that I should do that in this case I was simply following the standard practice that is followed in these circumstances. There are no particular reasons why I should recuse myself from hearing this application.
Conclusions
[21] When I weigh all these matters up I reach the conclusion that a stay in this case is not justified and is therefore refused.
Costs
[22] The plaintiffs are entitled to costs for what was a quarter day hearing. Accordingly, I order that the defendants pay costs based on Category 2 Band B
together with disbursements as fixed by the Registrar.
JA Faire
Associate Judge
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