King v Norfolk Nominees Limited [2013] NZHC 1232 (28 May 2013)

Last Updated: 25 July 2013

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2012-409-2082 [2013] NZHC 1232

BETWEEN PAUL ANTHONY KING Applicant

AND NORFOLK NOMINEES LIMITED Respondent

Hearing: 28 May 2013

Appearances: Applicant in Person with J Moss as Amicus Curiae

D A Webb and M R Bendall for the Respondent

Judgment: 28 May 2013

_{ORAL JUDGMENT OF FOGARTY J}

[1] Last night, I granted an ex parte injunction to restrain tender offers, on a property being sold by a judgment creditor, being accepted until I heard the matter at

9.30 am this morning.

[2] I advised in my minute that the purpose of this hearing was to examine whether the injunction should be continued. I have heard this morning from the applicant, Mr King, and J Moss (Mr King’s former counsel) whom I have appointed as an amicus curiae, and from counsel, Mr Webb, who appears with his junior, Mr Bendall, on behalf of the judgment creditor, Norfolk Nominees Limited.

[3] The reason I granted the ex parte application is that the judgment debtor was advising that the house was being marketed as a three bedroom house, when it was in fact a seven bedroom house.

[4] I have looked at the marketing material this morning. It was originally marketed as a three bedroom house with two showers and two garages. The

_{marketing is with a photograph and a normal sort of description, making it clear that}

KING v NORFOLK NOMINEES LIMITED [2013] NZHC 1232 [28 May 2013]

it is a mortgagee tender. It has, I understand, been advertised three times in The Press. It is also on the TradeMe site, and it is also on the Ray White website. Ray White are, of course, an international franchise, well experienced in selling. Mr Findlay is in Court this morning, but I have not directly heard from him. I have heard from his counsel, Mr Webb.

[5] The law is that a judgment creditor or a mortgagee exercising a power of sale must always sell the property as if it were their own property. They have the freedom to choose the time of sale, they do not have to wait for the appropriate market cycle. But when selling they must take care to get the market price, if they can in a forced sale situation, or close to the market price. It is often reduced to the proposition, which I think traces from Lord Templeman in the Privy Council in a

Hong Kong Privy Council case, Tse Kwong Lam v Wong Chit Sen,[1] to sell it as if it is

your own.

[6] I have also looked at the valuation from Ford Baker. I am looking at a large house on Cashmere Hills, which is described by Ford Baker as:

Of spacious accommodation, commanding views, configuration is such that part of the ground floor could be utilised as a self-contained flat.

The weaknesses are that it is:

Poorly maintained, kitchen and bathroom facilities warrant upgrading, redecoration is required.

[7] I am familiar with these sorts of large houses. There are many of them in Christchurch and elsewhere around New Zealand. They typically have a large number of rooms, some of which could be used as bedrooms, or they can be used for other purposes, such as TV rooms, games rooms and so on. More significant, these days, is the number of bathrooms. I can readily see that selling a six bedroom house with two bathrooms would appear to be a little odd.

[8] To my mind, what I am looking at here is a judgment made by Ray White as how to best describe this property. They originally did it on the basis of three

bedrooms and have now changed it to four. The advertisement with three bedrooms could be read as creating another bedroom anyway, because it says, “upstairs, three bedrooms plus bathroom”, and then says, “downstairs, kitchen, bathroom, living could be separate flat.

[9] My judgment, looking at this, is that I am looking at reasonable decision- making by a judgment creditor/mortgagee that falls within the bounds of acceptable judgments, selling as if it was one’s own.

[10] Mr King disagrees. He considers, from his own personal experience as a land agent, that this is being badly marketed. That the key time to grab the buyers, or grab the buyers’ interest, is at the first marketing, and that was with three bedrooms, and that was misleading.

[11] That is an argument but it is, in the face of what I call the probabilities, an odd argument. The probabilities are that a judgment creditor actually wants to get as much money from the property as possible. That is usually an easier way to repay the debt than pursue the judgment debtor through other means, such as bankruptcy. So there is every incentive on the judgment creditor to try to get a good sale price for the property. They did commission Ford Baker to do the valuation, which is another sign that they have undertaken this professionally. They have had 65 people go through the property, and are now in a position where they can examine the results of the tender and make a commercial judgment as to whether the property should be marketed again, or whether they should enter into a contract with one or more of the tenders.

[12] In short, what I see here is a sale process which is open to some criticism, but, in my judgment, is within the bounds of sales. Certainly, I am not of the view that it warrants an injunction from this Court to stop the sale.

[13] This judgment is not an issue estoppel on the issue as a whole. By which I mean what I am examining here is whether or not it is necessary to grant an injunction to stop the sale. There will still be room for Mr King to argue, at the end of the sales process, that it was sale at undervalue due to negligence, and pursue

damages. But I do not think his case is strong enough to warrant the intervention in the exercise by the judgment creditors of the rights of sale at this stage.

[14] For that reason, the application for an interim injunction is dismissed.

[15] The ex parte injunction, which has been live up until now, now comes to an end. The judgment creditor, Norfolk Nominees Limited, is able to sell the property and exercise its rights in this way.

[16] I assume that Norfolk Nominees Limited, the judgment creditor, has the usual rights under its agreement to recover its costs in these proceedings from the proceeds of sale.

[17] I did want Mr Moss to be present in Court. I appreciate that he has come here at some personal inconvenience. Because I was told he was not coming, I have appointed him amicus curiae, and his costs are to be paid out of the proceeds of sale as well – his reasonable costs. Mr Moss, you should inform Mr King what your costs are. Mr King, if you disagree with what Mr Moss’s fee should be, you can come back to the Court for assessment. Otherwise, it is to be paid out of the proceeds of sale. Thank you, Mr Moss, for appearing at short notice.

Solicitors:

Glaister Ennor, Auckland

Jai Moss, Christchurch

Copy to:

P King, Christchurch

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[1] Tse Kwong Lam v Wong Chit Sen [1983] 3 All ER 54.