Zaubernen v Huber HC Napier CIV 2008-441-477

[2008] NZHC 2513

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV 2008-441-477

BETWEEN  AVA ZAUBERNEN, NEW ZEALAND GUARDIAN TRUST COMPANY LIMITED AND ROBERT HUGH DUNCAN AS TRUSTEES OF THE HENRY WARD TRUST AND THE VALERIE WARD TRUST

Plaintiffs

ANDBERND DIETER HUBER AND UWE BALZAT

Defendants

Hearing:         20 August 2008

Appearances: D. Chan - Plaintiffs

No appearance - Defendants

Judgment:      20 August 2008

ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:           Carlile Dowling, Solicitors, Private Bag 6021 Napier

A ZAUBERNEN & ORS V BD HUBER & ORS HC NAP CIV 2008-441-477  20 August 2008

[1]      The present application before the Court is brought by the plaintiffs and seeks an order under s. 145A Land Transfer Act 1952 that Caveat No. 668267.1 not lapse.

[2]      The application and supporting documents were served upon the defendants on 28 July 2008.

[3]      The defendants have not filed any notice of opposition to the application nor any affidavit/s or supporting material.

[4]      Mr Chan appears for the plaintiffs before me today.  There is no appearance for or on behalf of the defendants.

[5]      Instead, this Court has received by facsimile, I understand on 18 August

2008, a document headed “Memorandum of Second Defendant Concerning Originating Application for Order under Section 145A of Land Transfer Act 1952 that Caveat not Lapse”.  This facsimile appears to be signed by the second defendant Mr Balzat.

[6]      In essence that Memorandum from the second defendant seeks:

(a)       an adjournment of the hearing of the plaintiffs’ application today; and

(b)an order that this matter be transferred to the Auckland High Court for hearing at some date after 24 September 2008.

[7]      Essentially the grounds advanced in the Memorandum for the adjournment and transfer sought would appear to be:

“8.The second defendant has had various changing demands placed on him by the plaintiffs’ counsel over the past weeks since and before being served papers relating to this hearing that have changed in scope  and  that  have  led  the  second  defendant  to  believe  that resolution of this matter was possible prior to the matter coming to Court.   These “moving goal posts” have had little to do with the apparent matter brought before the Court.  However, believing that resolution was likely, the defendants have had insufficient time to

instruct legal counsel to appear on their behalf on Wednesday, 20

August 2008 when the matter is due to be heard, especially since apparent resolution approaches have been systematically rejected by the Plaintiffs.

9.Additionally, the second defendant is actively involved in running a small business, is due to depart overseas on Thursday, 21 August

2008 for 3 weeks and won’t be able to personally appear in Napier on Wednesday, 20 August 2008, let alone prepare counsel to appear on his behalf.  It would be far better for the defendants if the matter was heard in Auckland High Court, a much easier transit point should the first defendant be able to appear and since two of the three plaintiffs also reside in Auckland, costs for all parties could be kept to a minimum.”

[8]      At  the  outset  as  I  have  noted,  these  proceedings  were  served  upon  the defendants and Mr Balzat the second defendant in particular on 28 July 2008.  For some 3 weeks it appears that little was done by the defendants.  Certainly no notice of opposition or any affidavit material was filed.  Instead, at the eleventh hour 2 days prior to the hearing of this matter, the second defendant Mr Balzat has faxed his Memorandum to the Court.   As I understand it no copy of the Memorandum was served upon the plaintiffs.  Notwithstanding that, the plaintiffs have now obtained a copy of that Memorandum when it was made available to their counsel by registry staff of this Court.

[9]      All this is rather unsatisfactory.

[10]     The present  application  before the Court  is  an  originating  application  to which r 458F High Court Rules applies.

[11]     Rule 244 High Court Rules deals with  such  originating applications  and states:

“1.A respondent who intends to oppose an application must file and serve on every other party a notice of opposition to the application within the earlier of:

(a) 10 working days after being served with the application; or

(b) 3 working days before the hearing date for the application.”

[12]     McGechan on Procedure at para. HR244.03 comments on r 244 and states in part:

“Unless the notice of opposition is served in accordance with the rule, the respondent will not be entitled to be heard in opposition. … The leave provision is now  omitted from  r  244.    That  notwithstanding,  Courts  are reluctant to deny a hearing to a party who has failed to comply with a time requirement through inadvertence or some reasonable cause.”

[13]     In the present case there is no application for leave by the defendants either pursuant to r. 244 or otherwise for the late filing of a notice of opposition to the present application.

[14]     Instead the second defendant Mr Balzat has forwarded to the Court the faxed Memorandum I have noted above.  That Memorandum as indicated merely seeks an adjournment of this matter and a transfer of the proceeding to the Auckland High Court essentially because “the defendants have had insufficient time to instruct legal counsel to appear on their behalf”.

[15]     This does not constitute “inadvertance” and as I see the position, it can hardly be said to be “reasonable cause”.  And, as I have noted above, given that the proceedings were served on 28 July 2008, the defendants in any event had nearly 4 weeks to obtain legal representation in this matter.

[16]     Further, there is nothing of any kind in the memorandum from the second defendant Mr Balzat to indicate that the defendants have any proper defence to the application which is before the Court.

[17]     Under all the circumstances, it is clear to me that the defendants have acted here in what might loosely be described  as a cavalier  fashion.   They have  not complied with High Court Rules requiring filing of the notice of opposition to the present application nor have they given any indication of the grounds for any valid defence or opposition to the present application.

[18]   Instead two matters appear from the Memorandum filed by the second defendant.    The  first  is  that  the  position  of  the  defendants  could  be  properly described  as  one  where  on  their  own  acknowledgement  they  “believed  that resolution of this matter was possible prior to the matter coming to Court” simply by discussion between the parties – see para. 8 of the second defendant’s Memorandum.  The second is the further unchallenged acknowledgement at para. (6) of  the  Memorandum  that  the  land  in  question  is  said  to  be  the  subject  of  the mortgage in question here for which the caveatable interest is claimed.

[19]     Under all these circumstances in my view it is appropriate that the application by the defendants for an adjournment of this application be declined.  An order to this effect is made.

[20]     Further, before me Mr Chan the Napier counsel appearing for the plaintiffs indicated that they were ready to proceed today, the  land  in  question  is  in  the Hawkes Bay, and given the strict time limits involved in applications to preserve caveats the plaintiffs would be significantly prejudiced if the adjournment sought was granted and the matter, as requested by the defendants, transferred to the High Court at Auckland.  This submission has some substance in my view.  There is no reason, as I see it, why this matter should not be dealt with today in this Court.  The request from the defendants to transfer the proceeding to the Auckland High Court is similarly declined.

[21]     That said I now turn to consider the substantive application itself.

[22]     The applicable principles for applications to preserve caveats under ss. 143,

145 and 145A Land Transfer Act 1952 are clearly established.   They include the following:

(a)      The  plaintiffs  must  establish  an  arguable  case  for  claiming  a caveatable interest in the property in terms of s. 137 Land Transfer Act  1952  –  Manson  Developments  Limited  v  Airport  Trustees Limited High Court Auckland, Associate Judge Faire, CIV 2008-404-

325, 19 June 2008.   The onus lies on the plaintiffs as caveators to show that they have this reasonably arguable case for the interest claimed – Castlehill Run Limited v NZI Finance Limited [1985] 2

NZLR 104.

(b)In terms of s. 137 Land Transfer Act 1952 the caveators must show that they are entitled to or beneficially interested in the estate or interest  in  the  land  referred  to  in  the  caveat  by  virtue  of  an unregistered agreement, instrument or document.

(c)      Even  if  the  caveators  establish  an  arguable  case  for  the  interest claimed, the Court retains a discretion to make an order removing the caveat in certain circumstances, although this discretion is to be exercised cautiously Pacific Homes Limited (in receivership) v Consolidated Joineries Ltd [1996] 2 NZLR 652.

[23]     In the present case the plaintiffs’ caveat claims an interest under an equitable mortgage.   The plaintiffs contend that they made a  loan  of  $111,000.00  to  the defendants in 1998 which was secured by an unregistered Agreement to Mortgage over  Certificate  of  Title  V3/1390.    A  copy  of  this  Agreement  to  Mortgage  is exhibited as Exhibit “5” to the affidavit of Ava Zaubernen dated 24 July 2008 filed in support of this application.  The Agreement to Mortgage records a principal sum of $111,000.00, a commencement date of 5 March 1998, a penalty interest rate and it confirms that the principal sum is to be repaid “upon demand”.

[24]     It is clear that an equitable mortgage creates a caveatable interest – Land Law in New Zealand Hinde McMorland & Sim Vol 1 page 565.   With regard to Land Transfer land an equitable mortgage is created by a specifically enforceable contract to grant a mortgage – Land Law in New Zealand Hinde McMorland & Sim page 484 para. 15.008.

[25]     In the present case, I am satisfied that the Agreement to Mortgage signed by both defendants, Mr Huber and Mr Balzat (in each case in the presence of solicitors in New Zealand) does create a specifically enforceable contract to grant a mortgage and is therefore an enforceable equitable mortgage.

[26]     Certificate of Title V3/1390 over which the caveat was originally registered some 10 years ago as I understand the position has subsequently been subdivided into a number of lots which include Certificate of Title HBW2/47.   It is this title HBW2/47 against which the caveat has been brought down from which the defendants now seek removal of the caveat.   The defendants’ application to the Registrar to lapse the caveat relates to this title HBW2/47.

[27]     In this case, as I have noted above, the caveat was registered on 11 March

1998.  It was over 10 years later on 1 July 2008 that the defendants applied to the Registrar pursuant to s. 145A for the caveat to be lapsed in so far as it affected certificate of title HBW2/47.  No explanation for the delay in seeking to have the caveat removed has been provided.  Nor as I have noted above have the defendants put before the Court any grounds whatever to justify their claim that the caveat should be removed.

[28]     On its face the caveat clearly supports a proper caveatable interest.  This is the Agreement to Mortgage which secures the principal sum advance of $111,000.00 made to the defendants on 5 March 1998.

[29]     In the 24 July 2008 affidavit of Ava Zaubernen in support of the present application she confirms that the defendants have not repaid the loan of $111,000.00. This is not challenged.   And, as I understand it from Mr Chan counsel for the plaintiffs, no demand for repayment of this sum has, as yet, been made.

[30]     There can be no doubt in my view that the plaintiffs as caveators here have done enough to establish a clearly arguable case for their claimed caveatable interest in terms of s. 137 Land Transfer Act 1952.

[31]     On the material before the Court, I can see no possible reason why the plaintiffs caveatable interest over the land in question which has gone unchallenged for over 10 years until July of this year could in any way be questioned.

[32]     That said, the plaintiffs’ application must succeed.

[33]     An order is now made that Caveat No. 668267.1 registered against Certificate of Title HBW2/47 (being part of the land which formerly was comprised in Certificate of Title V3/1390) shall not lapse.

[34]     The plaintiffs having been successful in their application are entitled to costs. The defendants are ordered to pay costs to the plaintiffs on a Category 2B basis totalling $5,280.00 together with disbursements totalling $707.50 in terms of the schedule attached to the submissions from counsel for the plaintiffs filed herein and dated 20 August 2008.

‘Associate Judge D.I. Gendall’