Watson v Williams
[2012] NZHC 3199
•29 November 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-5994 [2012] NZHC 3199
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: 23 November 2012
Counsel: BW Morley for plaintiffs
Appearance: SF Williams, second-named defendant in person
Judgment: 29 November 2012
JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for summary judgment]
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 [29 November 2012]
Table of Contents
The application ............................................................................................................ 1
Grounds in opposition ................................................................................................. 1
The Court’s approach to a summary judgment application ....................................... 2
Background ................................................................................................................. 4
The position analysed – jurisdiction .......................................................................... 6
The agreement ............................................................................................................ 9
The mortgagee’s power of sale ................................................................................. 10
Damages for wrongful possession ........................................................................... 12
The application
[1] The plaintiffs apply for summary judgment against the defendants. They seek the following orders:
(a) An order that they are entitled to possession of the property, the subject of this application;
(b)An order that the defendants, together with any family, friends or associates, vacate the property within one week from the date of judgment; and
(c) Damages for the defendants’ continual unlawful occupation of the property in the sum of $700 per week from 14 September 2012 to the date the defendants vacate the property.
Grounds in opposition
[2] This judgment should be read with my judgment on the plaintiffs’ application to set aside the defendants’ appearance objecting to the jurisdiction of this Court to hear the summary judgment application. In that judgment I set a time for the filing of a notice of opposition and affidavits in opposition.
[3] A notice of opposition, together with a further affidavit in opposition has now been filed. The grounds advanced in the notice of opposition are specified as follows:
(a) That the defendants have a lease agreement and tenancy agreement that confers upon them the status of lawful occupiers of the property at 40 Mayall Avenue, Beachhaven; and
(b)That, in any case, the High Court does not have jurisdiction to make an order for possession consequent upon a successful summary judgment application in the case of a residential tenancy as this
exclusive jurisdiction lies with the Tenancy Tribunal under the
Residential Tenancies Act 1986.
The Court’s approach to a summary judgment application
[4] Part 12 of the High Court Rules deals with applications for summary judgment. Rule 12.16 provides that rr 12.1 to 12.15 apply with all necessary modifications to counterclaims.
[5] Rule 12.2 of the High Court Rules requires that a plaintiff satisfy the Court that a defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action. The obligations imposed by the rule have been examined by a number of authorities.
[6] The correct approach to an application for summary judgment by a plaintiff was recently summarised in Krukziener v Hanover Finance Ltd where the Court said:1
The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11
PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept
uncritically evidence that is inherently lacking in credibility, as for example
where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng
Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s
assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
[7] In Pemberton v Chappell the Court also commented on the position where a
defence is not evident on a plaintiff’s pleading and said:2
If a defence is not evident on the plaintiff’s pleading I am of opinion that if the defendant wishes to resist summary judgment he must file an affidavit raising an issue of fact or law and give reasonable particulars of the matters
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307187 at [26].
2 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.
which he claims ought to be put in issue. In this way a fair and just balance will be struck between a plaintiff’s right to have his case proceed to judgment without tendentious delay and a defendant’s right to put forward a real defence.
[8] That position was further reinforced in Australian Guarantee Corporation
(New Zealand) Ltd v McBeth where the Court said:3
Although the onus is upon the plaintiff there is upon the defendant a need to provide some evidential foundation for the defences which are raised. If not, the plaintiff’s verification stands unchallenged and ought to be accepted unless it is patently wrong.
[9] Hypothetical possibilities in vague terms, unsupported by any positive assertion or corroborative documents will not frustrate the obligation on a plaintiff to discharge the onus of proof: SH Lock (NZ) Ltd v Oremland.4
[10] In Middleditch v New Zealand Hotel Investments Ltd, the Court raised a caution and said:5
The courts must of course be alert to the possibility of injustice in cases in which some material facts to establish a defence are not capable of proof without interlocutory procedures such as discovery and interrogatories. That does not mean that defendants are to be allowed to speculate on possible defences which might emerge but for which no realistic evidential basis is put forward.
[11] A court is not required to accept uncritically any or every disputed fact: Eng Mee Yong v Letchumanan.6 However, the Court will not reject even dubious affidavit evidence, even if there is suspicion as to the good faith of the deponent, if there is an essential core of complaint that supports a defence. In essence, the inquiry is whether or not the person’s assertion passes the threshold of credibility: Pemberton v Chappell;7 Orrell v Midas Interior Design Group Ltd.8
[12] In Tilialo v Contractors Bonding Ltd it was observed:9
3 Australian Guarantee Corporation (New Zealand) Ltd v McBeth [1992] 3 NZLR 54 (CA) at 59.
4 SH Lock (NZ) Ltd v Oremland HC Auckland CP641/86, 19 August 1986.
5 Middleditch v New Zealand Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 395.
6 Eng Mee Yong v Letchumanan [1980] AC 331 (PC).
7 Pemberton v Chappell, above n 2.
8 Orrell v Midas Interior Design Group Ltd (1991) 4 PRNZ 608 (CA) at 613.
9 Tilialo v Contractors Bonding Ltd CA50/93, 15 April 1994 at 6.
Drawing the line between mere assertions of possible defences and material which sufficiently raises an arguable defence so that the defendant should not be denied the opportunity to employ interlocutory procedures and have a trial is a matter of judgment. Views may well differ.
Background
[13] This proceeding relates to a residential property at 40 Mayall Avenue, Beachhaven, North Shore (“the property”). The defendants were formerly the registered proprietors of the property.
[14] In 2008 mortgages were registered against the property. The first was granted in favour of the ANZ Bank.
[15] The defendants defaulted under the first mortgage. Property Law Act notices were issued requiring the defaults to be remedied by 20 June 2011. Those defaults were not remedied. That gave ANZ Bank the right to possession of the property.
[16] The defendants claim that on 14 February 2012 they sold the property to Ms Elizabeth Lambert. The full sale and purchase contract has not been produced. The parts that have been placed as copies of that agreement before the Court disclose the following:
(a) The purchase price is specified as $1;
(b) Possession was required to be given on 14 February 2012;
(c) The agreement heading “Tenancies” refers to the Williams Family
Trust 99 year lease.
[17] In an affidavit sworn on 20 November 2012 the second-named defendant, Mr Williams, produced a further page of that agreement which contains the additional terms which provide as follows:
The vendors retain the Certificate of Title, no conveyance of the Certificate of Title. The vendors and the purchaser agree that the purchaser will resell the possession of the land to the vendors for $1 (one dollar) should the
vendors require the purchaser to do so. The purchaser will remove her caveat at this time.
[18] In an affidavit dated 23 November 2012, Mr Williams produced a copy of the front page of a residential tenancy agreement. It identifies the property. It refers to the rent being $50 per week to be paid in advance. It makes provision for the payment of a bond of $200. The tenancy was said to commence on 14 February
2012. No termination date for the tenancy is provided. The document contains a further clause:
The parties agree that this tenancy is governed by the Residential Tenancies
Act 1986 as per section 18.
[19] Mr Williams produced evidence that he had lodged a money bond of $200 on
30 March 2012 with the Department of Housing. He next produced an ASB Bank statement which appears to identify payments being made to Ms Lambert in respect of rent down to the present time. One can interpolate at this stage that the money should not have been paid to Ms Lambert in view of her bankruptcy.
[20] Ms Lambert lodged a caveat against the title claiming an interest pursuant to the sale and purchase agreement. The ANZ Bank brought an application to remove the caveat. The matter came before me on 28 May 2012. I ordered that the caveat be removed. The order was made on an unopposed basis. Although it was not known to me at the time I made the order, apparently on the same day Ms Lambert was adjudicated a bankrupt with the result that any interests she had in property vested in the Official Assignee by the operation of s 101 of the Insolvency Act 2006.
[21] The defendants also lodged a caveat, but that was later lapsed under s 145A
of the Land Transfer Act 1952.
[22] The ANZ Bank arranged an auction for the property. It was held on
23 August 2012. Mr Williams attended the auction together with Ms Lambert. Prior to the auction Mr Williams stood up and announced that if any person bid for the property they were in danger of losing their deposit and would not get possession of the property. He claimed that the property had already been sold earlier that year and there was a lease in place. The auction proceeded. The first-named plaintiff entered
into an agreement for sale and purchase with the ANZ Bank as mortgagee vendor for a purchase price of $790,000 with settlement due on 13 September 2012. The agreement contained clause 3 which provided:
The purchaser will be let into or entitled to possession on the settlement date, but the vendor is not required to give vacant possession.
[23] On 7 September 2012 the solicitors who had been instructed by the plaintiffs received an email from Ms Lambert. It advised that she had purchased the property earlier in the year, that the Bank and its solicitors were on notice of the sale and that she had placed a caveat on the title. It claimed that the only matter that was the subject of the auction was legal title to the property and not the right to possession. The first-named plaintiff says that the advice given to him was that there was no factual or legal issue that would delay or prevent the settlement of the purchase agreement that he had signed. The result was that the case settled on 14 September
2012. Title to the property has now been registered in the Land Transfer Office in
the plaintiffs’ names.
[24] Ms Lambert has been involved in a number of cases, most of which have concerned the lodging of caveats and entering into conveyancing arrangements directed at obstructing mortgagees enforcing their rights under registered mortgages.10
The position analysed – jurisdiction
[25] I deal with the question of which Court should determine whether it has jurisdiction to deal with the issues raised in this matter.
[26] In Auckland District Council v Attorney General the Court of Appeal said:11
The supervisory jurisdiction of the High Court has been secured since the
17th century. It is based on the fundamental premise that statutory (and some prerogative powers) can be validly exercised only within their true limits. It
10 Lambert v Plateau Farms Ltd (in rec) HC Rotorua CIV-2011-463-528, 12 September 2011; Plateau Farms Ltd (in rec and in liq) v Lambert [2012] NZHC 109; Rabobank New Zealand Ltd v Lambert [2012] NZHC 908; Rabobank New Zealand Ltd v Busch [2012] NZHC 1547; Waterhouse v Westpac New Zealand Ltd [2012] NZHC 1578.
11 Auckland District Council v Attorney General [1993] 2 NZLR 129 (CA) at 133.
is the task of the High Court to determine those limits and it does so by the process of judicial review. But the High Court cannot review its own decisions; it must determine its own jurisdiction and, if it is responsible for any irregularity, the defect must be corrected by the Court itself or on appeal: see Isaacs v Robertson [1985] AC 97, per Lord Diplock at p 103. It is in this sense that the High Court is described as a superior Court of general jurisdiction and other Courts and tribunals are described as "inferior" or as Courts or tribunals of limited jurisdiction: see R v Chancellor of St Edmundsbury and Ipswich Diocese [1948] 1 KB 195, per Wrottesley LJ at pp 205-206. As the superior Court of general jurisdiction, it is the High Court which is therefore responsible for determining the jurisdiction and legality of the decisions and conduct of the inferior Courts and tribunals. This supervisory or judicial control is of constitutional importance in maintaining the proper observance of the law, and is not to be lightly shed.
[27] In Sutherland v McAlister Associate Judge Osborne said:12
The jurisdiction of superior Courts is dealt with in Laws of New Zealand, Reissue 1, Courts, (the author of the original title being Sir Michael Hardie Boys). At paragraph 8 it is stated:
8. Jurisdiction of superior Courts.
The jurisdiction of the Court of Appeal and of the Courts Martial Appeal Court are defined by the statutes that constitute them. The High Court is a Court of unlimited or general jurisdiction.
A superior Court of general jurisdiction has authority to determine its own jurisdiction. Prima facie no matter is deemed to be beyond the jurisdiction of such a Court unless it is expressly shown to be so. An objection to its jurisdiction must show that another Court has exclusive jurisdiction over the matter in issue. For the jurisdiction to be excluded, the statutory intention must be clearly expressed.
The case cited as authority for the final sentence of that passage is Henderson v The Wangapeka Gold-Dredging Co Ltd (1904) 23 NZLR 833 (S.C.). Amongst the English cases cited by Williams J was Jacobs v Brett (1875) LR 20 Eq.1, in which Sir George Jessel M.R. at 6 observed:
It is not to be assumed that the Legislature intends to destroy the jurisdiction of a Superior Court. You must find the intention not merely implied but necessarily implied.
[28] The principle clearly applies to the Tenancy Tribunal. It is for this Court to determine whether it has jurisdiction or not.
12 Sutherland v McAlister [2011] 11 NZCPR 732 (HC) at [22].
[29] The particular issue is whether the Residential Tenancies Act 1986 excludes
the High Court’s jurisdiction to determine whether the Residential Tenancies Act
1986 applies to the facts of this case.
[30] The starting point for this examination is s 77. This section establishes the jurisdiction of the Tenancy Tribunal.
[31] Section 82 excludes other jurisdictions where the Tenancy Tribunal has jurisdiction. Section 82(1) provides:
82 Exclusion of other jurisdictions
(1) Notwithstanding any other enactment or rule of law to the contrary, no court or other body shall have originating jurisdiction in respect of any matter that is within the jurisdiction of the Tribunal unless—
(a) Proceedings in respect of that matter were commenced before that court or other body before the commencement of this Act; or
(b) An order is made under section 83(2) of this Act.
[32] The exclusions referred to in s 82 do not apply. Accordingly, it is necessary to return to s 77.
[33] Section 77(1) provides:
77 Jurisdiction of Tribunal
(1) The Tribunal has, subject to the Limitation Act 1950, jurisdiction to determine in accordance with this Act any dispute that—
(a) exists between a landlord and a tenant or between a landlord and the guarantor of a tenant; and
(b) relates to any tenancy to which this Act applies or to which this Act did apply at any material time.
[34] It was conceded by the defendants, and is obvious from the facts, that this is not a dispute between the landlord and the tenant. Accordingly, the first condition that must be met for the Tenancy Tribunal to have jurisdiction, namely the existence of a dispute between a landlord and tenant, does not apply in this case. That would only arise in this case if there was a dispute between the defendants and Ms Lambert.
Accordingly, I conclude that the jurisdiction to determine this dispute is this Court’s jurisdiction and not the Tenancy Tribunal’s jurisdiction.
The agreement
[35] I next consider the status of the agreement itself. It has all the hallmarks of being nothing but a sham. It does not provide for the transfer of title or any change consequently to the position as recorded on the land transfer title. It refers to a reselling of possession in the future, indicating that the only matter that passed was possession and not title, in the first place.
[36] In defining a sham, the classic case is Snook v London and West Riding
Investments Ltd where the Court said:13
I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the "sham" which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create.
[37] This was cited with approval in New Zealand in Laing v Lanron Shelf Company No 56 Ltd.14 Neither of these authorities set out the legal consequence of a finding that the transaction is a sham. I suspect, in such case, it is better to rely on the Illegal Contracts Act 1970.
[38] Section 3 of the Illegal Contracts Act 1970 provides that an illegal contract means:
any contract governed by New Zealand law that is illegal at law or in equity, whether the illegality arises from the creation or performance of the contract; and includes a contract which contains an illegal provision, whether that provision is severable or not.
[39] In Earl of Chesterfield v Janssen the Court found that fraud may be inferred from the circumstances that deceive other persons who are not parties to the
fraudulent agreement.15
13 Snook v London and West Riding Investments Ltd [1967] 2 QB 786 (CA).
14 Laing v Lanron Shelf Company No 56 Ltd [1994] 1 NZLR 562 (HC).
15 Earl of Chesterfield v Janssen (1751) 2 Ves Sen 125, 28 ER 82 at 100.
[40] In relation to fraudulent land transactions, in Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd the Court said:16
If the designed object of a transfer [is] to cheat a man of a known existing right, that is fraudulent, and so also fraud may be established by a deliberate and dishonest trick ...
That fraud refers to fraud in the specific context of the Land Transfer provisions. Fraud in that context has been recognised as more stringent that equitable fraud. If the transaction is illegal at least in equity, it would seem to me that the contract would meet the s 3 definition, and the Court could exercise its jurisdiction under the Illegal Contracts Act 1970 and, in particular, s 6 to declare the contract as having no effect.
[41] Because this is a summary judgment application I have decided that I will not deal with this matter on the above basis. I simply record that there at least appears to be a prima facie basis for a finding that the agreement is a sham and should therefore be set aside.
The mortgagee’s power of sale
[42] I next consider the position that arises when a mortgagee exercises its power of sale.
[43] The starting point for a consideration in respect of the positions of the parties is to consider the position of the mortgagee who sold to the plaintiffs. Registration of the Bank’s mortgage under the Land Transfer Act 1952 conferred on it an indefeasible title by the operation of ss 62 and 63 of that Act, subject to exceptions, none of which are applicable in this case.17
[44] When a mortgagee exercises a power of sale, such sale vests the estate in the land in the purchaser free of any other estates or interests, except for those which
16 Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1926] AC 101 (PC) at 106.
17 Capital & Merchant Investment Ltd (in rec.) v Russell Management Ltd (2009) 10 NZCPR 199 (HC), FM Custodians Ltd v Stewart Street Properties Ltd (in rec) HC Auckland CIV-2011-404-
7181, 2 December 2011 at [13]–[15].
have priority over the mortgage, or by reason of the mortgagee’s consent, are binding
by operation of s 105 of the Land Transfer Act 1952.
[45] An historic search of the title has been provided to the Court. There were no interests in priority of the mortgage registered. There is no evidence of any consent by the Bank to a prior mortgage or lease. The result is that the plaintiffs received clear title to the property.
[46] So far as leases are concerned, that matter is specifically covered by s 119 of the Land Transfer Act 1952 which provides that no lease of mortgaged or encumbered land shall be binding upon the mortgagee except so far as the mortgagee has consented thereto. There is simply no evidence of such a consent in this case.
[47] The result is that on completion of the sale to the plaintiffs, and the registration of title in their names, they became entitled to possession of the property. The defendants had no remaining interest in the property or right to be there. Accordingly, the plaintiffs are entitled to the first prayers for relief that they seek in the statement of claim.
[48] The defendants’ response to this is that they are entitled to rely on the provisions of s 58 of the Residential Tenancies Act 1986. In particular, the defendants rely on s 58(1)(a) which provides:
58 Mortgagee or other person becoming entitled to possession
(1) Where a mortgagee or other person becomes entitled (as against the landlord) to possession of the premises, the following provisions shall apply:
(a) The tenancy shall continue notwithstanding that the mortgagee or other person has become entitled (as against the landlord) to possession of the premises:
[49] Section 58(2) provides:
Subsection (1) of this section shall apply notwithstanding anything to the contrary in the Property Law Act 2007 or the Land Transfer Act 1952 or any other enactment.
[50] Mr Morley, correctly in my view, submitted that s 58 of the Residential Tenancies Act 1986 cannot apply in this case. That is because Ms Lambert’s ability to grant a lease could only arise upon her purported purchase of the property on
14 February 2012. However, by that date the ANZ Bank’s Property Law Act notices to the defendants had expired. Accordingly, as at 20 June 2011 the Bank had become entitled to possession of the property. Section 58 of the Residential Tenancies Act
1986 can only apply where there is continuation of a tenancy given prior to the mortgagee becoming entitled to possession. That position follows from a plain and literal reading of s 58(1) of the Residential Tenancies Act 1986. That being the case, s 58(2) and, in particular, the exclusion of the provisions of the Property Law Act
2007 and the Land Transfer Act 1952 simply has no application. The plaintiffs, on registration of the transfer of the title to the property into their name became entitled to all the incidents of legal and equitable ownership of the property, including the right to possession.
[51] Although he did not have to deal with a residential tenancy, the conclusion I have reached is the same as that reached by Asher J in Capital and Merchant Investment Ltd (in liq) v Russell Management Ltd.18
[52] As I have found that section 58 does not apply, it follows that the interest that Ms Lambert sought to create has no priority over the interest acquired by the plaintiffs. The plaintiffs are the parties who are entitled to possession and became entitled to possession when they settled their purchase.
Damages for wrongful possession
[53] The plaintiffs also seek damages, being the costs they have been forced to pay by way of rent at the rate of $700 per week from the date of settlement of their purchase to the date of this judgment. As at 4 December 2012 that figure will be
$7,700. No evidence has been advanced on the defendant’s behalf challenging the reasonableness of that figure. It appears to be less than 5 per cent of the actual figure paid by the plaintiffs when they purchased the property. I am satisfied that judgment
should therefore be entered for the sum of $7,700 by way of damages. That sum is
18 Above n 17, at [12] and [13].
calculated on the basis that possession is given on or before 4 December 2012. I am also satisfied that I should reserve leave to the plaintiffs to set the question of future damages down for trial in the event that possession is not given to them on or before
4 December 2012. I order accordingly.
[54] I now consider the question of costs. Mr Morley sought either indemnity costs or increased costs pursuant to r 14.6 of the High Court Rules. I have refrained, in this judgment, in concluding the illegality point because it was not argued fully before me and I did not consider, on the material before me, that it was appropriate to conclude the matter on a summary judgment basis. Had I concluded the matter in favour of the plaintiffs I would certainly have given serious consideration to the making of indemnity costs pursuant to r 14.6(4)(a) of the High Court Rules.
[55] There is a further reason, however, for not awarding either increased costs or indemnity costs in this case. It is unfortunate for the defendants that they have accepted advice from a person who has attempted to run schemes to defeat the position of mortgagees or persons who acquire title from mortgagees. The cost that has been incurred to challenge these schemes should, in reality, be visited against Ms Lambert. There is no point in doing that, however, in view of her bankruptcy. These matters have led me to the conclusion that the appropriate cost order in this case is that costs should be entered in favour the plaintiffs based on Category 2
Band B and to include both the hearing that dealt with the appearance protesting the jurisdiction of the Court and this application for summary judgment.
[56] I order accordingly.
[57] I also order that disbursements are to be fixed by the Registrar and payable to the plaintiffs.
JA Faire
Associate Judge
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