FM Custodians Limited v St Asaph Investments 2011 Limited [2016] NZHC 1915 (17 August 2016)

High Court of New Zealand

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FM Custodians Limited v St Asaph Investments 2011 Limited [2016] NZHC 1915 (17 August 2016)

Last Updated: 23 August 2016

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2016-409-000202 [2016] NZHC 1915

BETWEEN	FM CUSTODIANS LIMITED Plaintiff
AND	ST ASAPH INVESTMENTS 2011 LIMITED Defendant

Hearing:	17 August 2016
Appearances:	M B Couling for Plaintiff D M Lester for Defendant
Judgment:	17 August 2016

_{JUDGMENT OF DUNNINGHAM J}

[1] The plaintiff has made an application for summary judgment, seeking judgment against the defendant for principal and interest owing to the plaintiff under a loan agreement, along with an order that the defendant, and Mr David Henderson, the occupier of property known as the Heritage Hotel unit,¹ vacate and deliver up possession to the plaintiff of that property.

[2] Judgment has now been entered against the defendant for the total of

$3,301,500.²

[3] In relation to the orders for vacant possession, directions have been made today to add Mr Henderson as a defendant. The application in respect of him will be addressed at the conclusion of the period for filing a notice of opposition to the

_{application made in respect of him.}

¹ _{Being a property comprised in certificates of title CB 42B/1232, CB 42C/312 and CB 42C/193.}

² _{In judgments of the Court issued in these proceedings on 3 June 2016 and 17 August 2016.}

FM CUSTODIANS LIMITED v ST ASAPH INVESTMENTS 2011 LIMITED [2016] NZHC 1915 [17 August

2016]

[4] As a consequence, the only matter to be addressed at this hearing was whether an order for vacant possession should be made against the defendant.

[5] As it transpired, while the order was not consented to, no submissions in opposition were made. After hearing from the plaintiff, I made an order granting the plaintiff’s application for vacant possession and I advised that my reasons would follow shortly. This judgment provides those reasons.

[6] In order to grant summary judgment on the plaintiff’s application, I must be satisfied that the defendant has no defence to the claim. As is well understood, in the context of summary judgment, the words “no defence” is essentially the absence of any real question to be tried.³

[7] The plaintiff’s pleadings explain that the defendant company had allowed Mr Henderson to take physical possession of the Heritage Hotel unit. However, the plaintiff had not consented to him residing there and, on 16 November 2015, the plaintiff gave the defendant written notice that it required Mr Henderson to vacate the unit and to provide vacant and physical possession by handing over the keys to the property. Those pleadings were supported by the affidavit evidence of Mr Peter James Hutchinson.

[8] In the defendant’s notice of opposition no defence was raised to the claim for vacant possession as against the defendant. Instead, it states:

In respect of the orders sought against Mr Henderson, he is not a party to these proceedings and is not represented, nor has he been served. No orders can be made effecting him without him being served and any issues in respect of his tenancy arrangements considered by the Residential Tenancies Tribunal if necessary.

³ Pemberton v Chappel [1986] NZCA 112; [1987] 1 NZLR 1 at 3.

[9] The affidavit of Mr Errol Wayne Bailey, the defendant’s director, in support of the notice of opposition says simply that “Mr Henderson has been in possession of the unit from shortly after the defendant purchased the Heritage units and the plaintiff has known of his residency since that time”.

[10] The simple question is whether the evidence filed by the defendant raises an arguable defence to the plaintiff’s claim for vacant possession as against the defendant. Mr Couling submits that, even if there is some form of tenancy agreement between the defendant and Mr Henderson (although he says there is simply no evidence to substantiate this), that does not prevent the mortgagee from being able to exercise its right to possession, where it has not consented to that

lease.⁴

[11] The mere knowledge by the plaintiff of Mr Henderson’s occupation (whether a lease or otherwise) does not constitute consent. In this regard, Mr Couling cited Cashmere Capital Limited v Carroll,⁵ where it was said that:

A mortgagee who is aware of a third party’s interest, and passively stands by, making no objection, has not consented. For there to be a valid consent, the mortgagee must either have been aware of the essential terms of the lease or be shown to have consented to the lease, whatever its terms may be. Only then does the mortgagee consent to the terms of the other interests in the sense of agreeing to be bound by it. Making an advance as mortgagee, while being aware of the other instrument and another party’s interest in it, of itself, does not amount to consent.

[12] Mr Couling submitted, and I agree, that the evidence of Mr Bailey neither raises an arguable defence that there is a tenancy agreement of some form in place, nor does it suggest that the mortgagee has done anything which amounts to consenting to that arrangement. He says no more than that Mr Henderson is in “occupation” of the property and the plaintiff is aware of this. There is, therefore, no evidence given to support a defence that there was consent on the part of the plaintiff to Mr Henderson’s occupation of the property. No other defence was apparent which would prevent the plaintiff from being entitled to vacant possession of the property

_{in terms of the plaintiff’s application.}

⁴ _{Relying on s 138(1) of the Property Law Act 2007.}

⁵ Cashmere Capital Limited v Carroll [2009] NZSC 123.

[13] For these reasons I made an order on 17 August 2016 at the conclusion of the hearing, that the defendant was to vacate and deliver up possession to the plaintiff of the property comprising certificates of title CB 42B/1232, CB 42C/312 and CB

42C/193, no later than 14 days from the date of the order.

Solicitors:

Anderson Lloyd, Dunedin

D M Lester, Barrister, Christchurch

Canterbury Legal, Christchurch