Westpac New Zealand Limited v Law HC Auckland CIV 2011-404-007989 [2011] NZHC 2092 (19 December 2011)

Last Updated: 26 February 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

_{CIV 2011-404-007989}

UNDER Land Transfer Act 1952

IN THE MATTER OF an application to remove caveat no.

8927313.1 pursuant to s143 of the Land

Transfer Act 1952

BETWEEN WESTPAC NEW ZEALAND LIMITED Applicant

AND SET KIEN LAW Respondent

2011-404-007990

AND UNDER Land Transfer Act 1952

IN THE MATTER OF an application to remove caveat no.

8785666.1 pursuant to s143 of the Land

Transfer Act 1952

BETWEEN WESTPAC NEW ZEALAND LIMITED Applicant

AND SET KIEN LAW Respondent

Hearing: 19 December 2011

Appearances: E C Gellert/M A Powell for the Applicant

Ee Kuoh Lau as Authorised Attorney

Judgment: 19 December 2011

_{ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN}

WESTPAC NEW ZEALAND LIMITED V SET KIEN LAW HC AK CIV 2011-404-007989 19 December 2011

E Gellert/M Powell, Simpson Grierson, Auckland – [e-mail] /

[e-mail]

Ee Kuoh Lau, Manukau – [e-mail]

[1] These two matters are very similar. Each concerns an application by the applicant (Westpac) to remove caveats registered over land owned by persons who have fallen into default with mortgage payments, upon whom Property Law Act notices have been served and where the properties have been sold by mortgagee sale and are due for settlement in January 2012.

[2] Under CIV 7989 the Court is dealing with three properties which had been owned by Hua Zhang (Mr Zhang). Under CIV 7990 the Court is dealing with two properties that were owned by Chia Ling Lu (Ms Lu).

[3] In both instances caveats were lodged by the respondent, in the case of Mr

Zhang’s properties, on 29 November 2011, and in the case of Ms Lu’s properties on

10 June 2011. In the case of Mr Zhang’s properties the estate interest claimed is:

Pursuant to an agreement dated 18 March 2011 between the registered proprietor... as lessor and the caveator Set Kien Law as pre paid lessee for five (5) years from 1 September 2011.

[4] In the case of Ms Lu’s properties the estate or interest claimed is:

As purchaser and lessee pursuant to an agreement dated 5 March 2011 between the registered proprietor... and the caveator.

[5] Westpac’s applications were filed on 13 December 2011. Although service of

same was proved to me when this matter was first called before me on 14 December

2011, I considered more time was required to provide an opportunity for any opposition to be filed.

[6] For the purposes of today’s call Mr Lau has in each case filed a ‘Notice of

Opposition and Proposed Settlement’.

[7] In the course of hearing Mr Lau’s submissions it appears the respondent does not challenge Westpac’s claim of an interest in the properties which has priority over the interests claimed by the caveator. Indeed by the conclusion of his address to me Mr Lau, conceding that Westpac’s applications would be granted, sought an order

from the Court preserving to the caveator’s a right to file further caveats after the

properties had transferred to their new owners.

[8] The respondent’s claim of an interest relates to agreements signed for the sale of the Zhang and Lu land. In each the deposit is set at a figure which is about one quarter to one fifth of the total purchase price. The purchase prices ranged in value from between $165,000 and $185,000.

[9] The agreements provided an added clause which stated:

The paid deposit of... can be converted to five years rent/lease if the vendor cannot provide clear title on settlement date.

[10] The agreements provided for settlement by 30 August 2011.

[11] It is the caveator’s position that each of the properties is now subject to a five year lease from about the beginning of September 2011 and in respect of which the lease payment due has been paid in full by the deposit paid by the purchase agreements.

[12] As I earlier noted all five properties have now been on sold, one of these being subject to a conditional agreement. All are due to settle by the end of January. In those circumstances I felt it appropriate to hear the applications today to decide whether in that outcome anything could be raised to persuade me to do otherwise then as appeared clear from the evidence provided on Westpac’s behalf.

[13] In his address to the Court Mr Lau provided a copy of a power of attorney containing his authorisation to represent the respondent. Although there may have been an issue concerning whether that authorisation extended to appearing in Court on behalf of the respondent, no issue was taken with it and I made it clear to Mr Lau that his submissions were welcome.

[14] In the course of his submissions Mr Lau addressed challenges to Westpac’s mortgage. Whilst noting that those obliged a mortgagor to obtain Westpac’s consent to the letting of any mortgage property, to the selling or disposal of that property or any interest in it, or to the giving anyone of a right to use the mortgage property, Mr

Lau commented that on the particular page of the mortgage in question there was no initial or signature of the mortgagor.

[15] It seemed to me that Mr Lau’s submission was an issue for the bank and its mortgagor borrower, rather than being a matter upon which a claim of a caveatable interest could be advanced. I informed Mr Lau accordingly. Also the evidence indicates that the mortgagor completed the security documents before a solicitor who attended to registration of same online on behalf of Westpac.

[16] Mr Lau made submissions in other respects in connection with the mortgaged document but I informed him that these were not properly a matter for consideration for me today.

[17] Mr Lau referred to the mortgagee’s conditions of sale document prepared in connection with the process for selling the properties. In particular one clause noted that the property was sold subject to existing tenancies or occupations (if any) including holding over by the mortgagor.

[18] Another clause referred to the fact that Westpac made no warranties as to the property and that it would be the purchaser’s sole obligation to make the property comply with legal requirements or directions.

[19] I informed Mr Lau that in the future tenancy/leasing issues would be a matter between the tenants and the new property owners, in due course. I said the Court would not undertake any action that would affect the rights of persons who were not before the Court today.

[20] Mr Lau refers to evidence given that prospective purchasers were given notice of the tenant’s claimed rights of occupation when perspective purchasers were inspecting the properties. He says therefore that purchasers have been put on notice and cannot now complain if tenants wished to assert those rights post settlement.

[21] But, that is not a matter for consideration in this caveat hearing either. The mortgagee conditions of sale make it clear that the properties are sold subject to any

existing tenancies. Westpac’s priority interest is not affected by the caveator’s tenancy interest claims. There has been no challenge to the process by which Westpac has assumed control over the sale process pursuant to its mortgagee rights.

[22] The onus of proof is on a caveator to establish he/she has a reasonably arguable case for the interest claimed. Even if such an arguable case is established the Court retains a discretion to make an order removing the caveat, but in that case the Court will act cautiously. [1]

[23] In this case the clear evidence is that Westpac’s rights by its mortgage or pursuant to the Land Transfer Act 1952 cannot be displaced without Westpac’s consent being given. There has been no such consent. The actions on behalf of the tenants to advise prospective purchasers of their interest cannot be construed as the giving of consent by Westpac or as recognising an interest in the property greater than that held by Westpac.

[24] Pursuant to s 105 of the Land Transfer Act 1952, an interest claimed in a caveat has no priority and has no protection on registration of any transfer executed by a mortgagee for the purpose of the exercise of the mortgagee’s power of sale of land. Clearly in this case the interest claimed in the caveat is not sustainable against a first ranking registered mortgagee exercising its power of sale.

Orders

[25] In the case of all properties there will an order removing the caveats of the respondent.

[26] The respondent shall pay costs on a category 2B basis, in connection with each application, as set out in the schedule of costs and disbursements attached to

_{applicant counsels’ submissions.}

Associate Judge Christiansen

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[1] Pacific Homes Ltd (In Rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652.