Westpac New Zealand Limited v Lau [2018] NZHC 385 (15 March 2018)

Last Updated: 8 February 2019

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-000247 [2018] NZHC 385

UNDER	the Land Transfer Act 1952
BETWEEN	WESTPAC NEW ZEALAND LIMITED Applicant
AND	EE KUOH LAU First Respondent CHENGJIANG WU Second Respondent

	CIV-2018-404-000248
UNDER	the Land Transfer Act 1952
BETWEEN	WESTPAC NEW ZEALAND LIMITED Applicant
AND	EE KUOH LAU Respondent

Hearing:	[On the Papers]
Appearances:	J S Learner for the Applicant No Appearance of, or for the Respondents
Judgment:	15 March 2018

JUDGMENT OF EDWARDS J

This judgment was delivered by Justice Edwards on 15 March 2018 at 10.00 am, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

WESTPAC NZ LTD v LAU [2018] NZHC 385 [12 March 2018]

Introduction

[1] Westpac New Zealand Ltd (Westpac) applies for orders removing caveats and prohibiting the respondents in both proceedings from lodging caveats over the properties.

[2] The caveats which are the subject of proceeding CIV-2018-404-248 (-248 proceeding) were withdrawn by the respondent, Mr Lau, after the application was filed. However, Westpac pursues its application for an order prohibiting Mr Lau from filing further caveats over the properties.

[3] The orders sought in proceeding CIV-2018-404-247 (-247 proceeding) relate to caveats lodged by the respondents, Mr Lau and Mr Wu, over four properties in the North Auckland region. Orders prohibiting the respondents from filing further caveats over the properties are sought in that proceeding also.

[4] On 8 March 2018, I granted that part of the application in the -247 proceeding which related to the removal of the four caveats. There was insufficient time in the caveat list to hear argument on the applications made in both proceedings for orders prohibiting the respondents from filing further caveats. Accordingly, I directed the Registry to set down those parts of the applications for hearing.

[5] This judgment sets out the reasons for the orders made removing the four caveats in the -247 proceeding.

Service on respondents

[6] Both sets of proceedings were served on the respondents by posting them to the address stated in the caveats. In addition, copies of the proceedings were emailed to Mr Lau at an email address which he has been using to correspond with counsel for Westpac. Westpac does not have any other contact details for Mr Wu.

[7] The application was first called in the caveat list on 27 February 2018. Neither of the respondents appeared. I adjourned the application to the caveat list on Tuesday, 6 March 2018, and directed counsel for Westpac to serve a copy of my minute advising
of the new mention date. That minute was served at the address provided for in the caveats. When the application was called on 6 March 2018, there was no appearance by either Mr Lau or Mr Wu.

[8] I am satisfied that the proceedings have been served in accordance with r 19.12A(1) of the High Court Rules 2016 which allows service to be made at the address stated in the caveat. It would also appear that Mr Lau has received the proceedings as he indicated by email that he intended to withdraw the four caveats which are the subject of the -247 proceeding but was unable to make contact with Mr Wu.

[9] Accordingly, I proceeded to determine the application in the -247 proceeding after reading the affidavits in support and the submissions filed by Ms Learner for Westpac, and after hearing oral submissions made by Ms Learner in the caveat list.

The caveats and the properties

[10] Westpac holds a registered first-ranking mortgage over each of the following four properties:

(a) Certificate of title NA346/195, North Auckland Registry, 676 Mt Albert Road, Auckland (Mt Albert property);

(b) Certificate of title NA704/91, North Auckland Registry, 43 Candia Road, Swanson (Swanson property);

(c) Certificate of title NA11D/1110, North Auckland Registry, 32 Weranui Road, Waiwera (Waiwera property);

(d) Certificate of title 215511, North Auckland Registry, 159 Hillcrest Road, Hatfields Beach (Hillcrest Road property).

[11] Westpac’s registered mortgage grants it the power to sell the property in the event of default by the registered owner. The mortgage also requires the mortgagor to
obtain Westpac’s written consent to the grant of any interest in the property, including any lease.

[12] Mr Lau registered caveats over each of the four properties, signing on behalf of Mr Wu as his agent. The caveats each assert an interest in land pursuant to a long- term pre-paid lease. In each case, the caveats were registered after Westpac had registered its mortgage.

[13] Affidavit evidence filed in support of the application confirms that none of the four mortgagors disclosed any third-party interest in the mortgaged property to Westpac, and Westpac’s consent was not sought in relation to any lease agreements referred to in the caveats. Accordingly, Westpac has not consented to any party having an interest in any of the properties in priority to its registered mortgages.

[14] The registered proprietor of each of the properties fell into arrears in mortgage payments. Westpac issued notices under s 119 of the Property Law Act 2007. Those notices remain unremedied and Westpac has since exercised its power of sale in respect of all four properties. Three of the properties (the Mount Albert, Hillcrest and Waiwera properties) have been sold unconditionally with settlement to take place on 16 March, 22 March and 23 March 2018 respectively. The Swanson property has not yet been sold as none of the tenders received were acceptable to Westpac. That property is being sold by private negotiation.

Analysis

[15] Section 143 of the Land Transfer Act 1952 (LTA) allows the High Court to make an order removing a caveat. The caveator bears the onus of proof to establish that he or she has a reasonably arguable case for the interest claimed.¹ Even if a reasonably arguable case can be established, the Court retains a discretion to make an order removing the caveat, but it will act cautiously in those circumstances.²

¹ Sims v Lowe [1988] NZCA 253; [1988] 1 NZLR 656 (CA) at 660.

² Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.

[16] Whilst Mr Lau and Mr Wu may have a caveatable interest in each of the four properties, they are unable to show that this interest takes priority over the interests of Westpac as mortgagee.

[17] Section 105 of the LTA provides that upon registration of any transfer executed by a mortgagee for the purpose of exercising a power of sale, the estate or interest of the mortgagor shall pass free of any estate or interest except an estate or interest created by an instrument which has priority over the mortgage.

[18] Section 119 of the LTA provides that no lease of mortgaged or encumbered land shall be binding upon the mortgagee except so far as the mortgagee has consented thereto.

[19] The effect of both ss 105 and 119 is that Westpac’s rights under its mortgage cannot be displaced without Westpac’s consent being given. A sale by a mortgagee pursuant to a prior registered mortgage therefore has priority over the interest protected by a caveat subsequently registered against the title.³

[20] Accordingly, as the caveats were registered after Westpac’s mortgages over the properties were registered, and as Westpac did not consent to the mortgagor entering into a lease over the property, Westpac’s interests take priority over those protected by the caveats.

[21] There is a history of Mr Lau lodging caveats against properties over which Westpac holds a registered mortgage.⁴ Mr Lau’s purpose in lodging the caveats appears to be to disrupt the mortgagee sale process. It is no doubt for this reason that Westpac has applied for orders prohibiting Mr Lau and Mr Wu from registering further caveats over the subject properties.

3. National Mutual Finance (1988) Ltd v Berryman HC Wellington M451/91, 2 October 1991 at 4; Westpac New Zealand Ltd v Set Kien Law HC Auckland CIV-2011-404-7989, 19 December 2011 at [23]–[24]; and Westpac New Zealand Ltd v Set Kien Law [2012] NZHC 1065 at [24].
4. Westpac New Zealand Ltd v Set Kien Law [2012] NZHC 1065; Westpac New Zealand Ltd v Set Kien Law HC Auckland CIV-2011-404-7989, 19 December 2011; and Westpac New Zealand Ltd v Lau [2017] NZHC 3106.

[22] Finally, I am satisfied that the jurisdiction to order removal of the caveat over the Swanson property exists under s 143 despite a sale and purchase agreement not yet being concluded.⁵

Result

[23] The orders sought in paragraph 1(a) of the application in the -247 proceeding are granted.

[24] The remaining parts of the application in the -247 and -248 proceedings are adjourned for hearing at a time to be fixed by the Registrar. The costs of each application are to be determined at that hearing.







Edwards J

Solicitors: Simpson Grierson, Auckland

Copies To: E K Lau, Auckland

C Wu, Auckland

⁵ Public Trust v Toussaint (2004) 5 NZ ConvC 194.034 at [51]–[60].