ADAMS AND BUCHANAN (AS LIQUIDATORS OF STARPLUS HOMES LTD (IN LIQUIDATION)) v SUN [2014] NZHC 912

ADAMS AND BUCHANAN (AS LIQUIDATORS OF STARPLUS HOMES LTD (IN LIQUIDATION)) v SUN [2014] NZHC 912

Standard terms and memoranda of Magsons, Hamilton Hardware, United Timber and RD 1 created equitable mortgages that attached to present and after-acquired land; those equitable charges are valid and rank in time according to when they arose (Hamilton Hardware, RD 1, Magsons, United Timber), the registered second mortgage of Sun is valid but marshalling is available and should be applied because the order of sales by the senior mortgagee (ASAP) produced an arbitrary windfall to Sun; the Court directed proportional apportionment and reserved costs and precise quantification to allow submissions and a short hearing.

Citation
[2014] NZHC 912
Parties
Applicants: Shaun Neil Adams and John Robert Buchanan (as Liquidators of Starplus Homes Ltd (in liquidation)); First Respondent: David Wei Sun; Second Respondent: Magsons Hardware Ltd; Third Respondent: Hamilton Hardware Retail Ltd; Fourth Respondent: United Timber Merchants Ltd; Fifth Respondent: Dale King Building Supplies Ltd; Sixth Respondent: RD 1 Ltd
Court
High Court
Jurisdiction
New Zealand
Judgment Date
6 May 2014
Procedural Posture
Directions Application Under Companies Act 1993 Concerning Distribution of Surplus From Mortgagee Sales / Judgment Delivered 6 May 2014
Outcome
Court held that Sun, Magsons, Hamilton Hardware and RD 1 are entitled to participate in the surplus held in Court; suppliers' equitable charges are valid and attach to present and after-acquired land; marshalling is available and should be applied to achieve equitable apportionment; costs reserved and timetable set...
Legal Topics
Marshalling, Priority of Security Interests, Equitable Mortgages, Caveats, Mortgagee Sales, Personal Property Securities
Company Law Property Law Equity Insolvency Commercial Law Marshalling Priority of Security Interests Equitable Mortgages +3 more

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Parties

Shaun Neil Adams and John Robert Buchanan (as Liquidators of Starplus Homes Ltd (in liquidation))

Applicants

David Wei Sun

First Respondent

Magsons Hardware Ltd

Second Respondent

Hamilton Hardware Retail Ltd

Third Respondent

United Timber Merchants Ltd

Fourth Respondent

Dale King Building Supplies Ltd

Fifth Respondent

RD 1 Ltd

Sixth Respondent

Procedural Posture

Directions Application Under Companies Act 1993 Concerning Distribution of Surplus From Mortgagee Sales / Judgment Delivered 6 May 2014

Legal Issues

  1. 1 Validity of suppliers' claimed equitable security interests in present and after-acquired land
  2. 2 Whether subsequent agreements displaced or modified earlier security provisions
  3. 3 Priority between registered legal mortgages and equitable charges

Ratio Decidendi

Standard terms and memoranda of Magsons, Hamilton Hardware, United Timber and RD 1 created equitable mortgages that attached to present and after-acquired land; those equitable charges are valid and rank in time according to when they arose (Hamilton Hardware, RD 1, Magsons, United Timber), the registered second mortgage of Sun is valid but marshalling is available and should be applied because the order of sales by the senior mortgagee (ASAP) produced an arbitrary windfall to Sun; the Court directed proportional apportionment and reserved costs and precise quantification to allow submissions and a short hearing.

Court Disposition

Court held that Sun, Magsons, Hamilton Hardware and RD 1 are entitled to participate in the surplus held in Court; suppliers' equitable charges are valid and attach to present and after-acquired land; marshalling is available and should be applied to achieve equitable apportionment; costs reserved and timetable set...

Orders

  • Leave reserved for parties to make further submissions on amounts payable and costs
  • Costs reserved