Country Hospitality Management (NZ) Limited v McCullough [2012] NZHC 818 (2 May 2012)

Last Updated: 22 May 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-1213 [2012] NZHC 818

IN THE MATTER OF an application under the Property Law Act

2007 and Parts 2 and 5 of the Credit Contracts and Consumer Finance Act 2003 for discharge and removal of mortgage no.

7055480.1

BETWEEN COUNTRY HOSPITALITY MANAGEMENT (NZ) LIMITED AND FOX GLACIER PLAZA LIMITED Plaintiffs

AND STEPHEN MCCULLOUGH AND CAROLINE MCCULLOUGH Defendants

Hearing: (on the papers)

Counsel: M C Black for the Plaintiffs

Judgment: 2 May 2012

_{JUDGMENT OF WOODHOUSE J}

This judgment was delivered by me on 2 May 2012 at 5:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar

..........................................

Counsel:

Mr M C Black, Barrister, Auckland

Instructing Solicitors:

Mr R Wood, Solicitor, Auckland

COUNTRY HOSPITALITY MANAGEMENT (NZ) LIMITED AND FOX GLACIER PLAZA LIMITED V MCCULLOUGH AND MCCULLOUGH HC AK CIV-2012-404-1213 [2 May 2012]

[1] The first named plaintiff (Country Hospitality) seeks an order discharging a mortgage granted to the defendants and registered against title to land owned by Country Hospitality.

[2] The claim has proceeded by way of formal proof. There is proof of service on the defendants. No steps have been taken by them within the requisite period.

[3] I am satisfied from the evidence for the plaintiffs that Country Hospitality is entitled to have the mortgage discharged. The reasons, in essence, are that the total owing to the defendants and secured by the mortgage has been paid and the defendants have failed or refused to provide a discharge of the mortgage pursuant to s 83 of the Property Law Act 2007 (the Act).

[4] There is a question as to whether the court may make an order directing that a registered mortgage is discharged, with that order having the same effect as a duly executed mortgage discharge instrument under s 83 of the Act, as opposed to an order directing the defendants to execute a discharge of mortgage with provision for a Registrar of the High Court to execute a discharge of the mortgage in the event of default by the defendants.

[5] Section 111 of the Act appears to provide a general power for a court to make an order that will operate in the same manner as a duly executed mortgage discharge. The relevant provisions are as follows:

111 Certificates and orders operate as discharge of mortgage

(1) A certificate by the Registrar that the amount ordered to be paid into court under section 110 was so paid, or a sealed copy of an order of a court declaring that all amounts secured by the mortgage have been paid in full, has effect as if it were a duly executed mortgage discharge instrument under section 83.

(2) If the mortgage referred to in subsection (1) is over land and is registered under the Land Transfer Act 1952,—

(a) the Registrar-General must, on the registration of the certificate or order referred to in subsection (1), make an entry in the register relating to the certificate or order; and

(b) when an entry is made in the register under paragraph (a), the mortgage is discharged.

(3) ...

[6] It is not entirely clear whether the provision in s 111(1) in respect of the operation of a court order is of general application or whether it is confined to circumstances referred to in s 109. Sections 109 and 110 make provision for discharge of a mortgage by court order when the amount secured by a mortgage has been paid, but the mortgagee is out of the jurisdiction, cannot be found, or is dead, or if there is some uncertainty as to who is entitled to receive payment. The first part of s 111(1), referring to the Registrar’s certificate, is clearly confined to those circumstances, and those circumstances do not apply in this case. Also, reference in s 111(1) to “the mortgage”, as opposed to “a mortgage”, in connection with a court order, suggests that this provision is also confined to the circumstances referred to in s 109.

[7] I have not been referred to any earlier case discussing the scope of s 111(1) and I have not considered it necessary in the circumstances of this particular case to research the point. I am satisfied that, in circumstances as outlined at [3] above, the court does have power to make an order that will have the same effect as a duly executed mortgage discharge instrument under s 83. This power either derives from s 111(1) or the court’s inherent jurisdiction.

[8] Consequently there are orders as follows:

(a) It is declared that all amounts secured by mortgage M7055480.1 registered against title to the land contained and described in Certificate of Title CB23B/174 (Canterbury Land Registration District) have been paid.

(b) The preceding order (a) has effect as if it were a duly executed mortgage discharge instrument under s 83 of the Property Law Act

2007.

(c) On registration of these orders the Registrar-General of Land must make an entry in the register relating to these orders and upon such entry in the register mortgage M7055480.1 shall be discharged.

[9] The plaintiffs also seek judgment against the first named defendant, Stephen McCullough, in a sum of $114,325, together with further sums. The claim for the liquidated sum of $114,325 was served on the defendants. I am satisfied that this claim is established and that the plaintiffs are entitled to judgment for this sum at this stage. If the plaintiffs wish to pursue a claim for other losses or costs this will have to be pursued on appropriate notice to the defendants. In respect of these matters:

(a) There is judgment for the plaintiffs against the first named defendant

Stephen McCullough in a sum of $114,325.

(b) The plaintiffs are to elect by Friday, 25 May 2012 whether they wish to proceed with further claims or discontinue this proceeding in respect of any further claims. Election to proceed is to be effected by filing and serving, by 25 May 2012, an appropriate application with supporting evidence. If such has not been done by 25 May 2012 this proceeding shall on 8 June 2012 be deemed to have been discontinued in respect of such further claims, unless before 8 June 2012 the plaintiffs apply on reasonable grounds for an extension of time.

_{[10] The plaintiffs are entitled to costs on a 2B basis.}

Woodhouse J