ANZ BANK NEW ZEALAND LIMITED v TE KOOTI [2017] NZHC 90

ANZ BANK NEW ZEALAND LIMITED v TE KOOTI [2017] NZHC 90 [7 February 2017]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2017-404-000083[2017] NZHC 90UNDER the Land Transfer Act 1952IN THE MATTER OF an application for the removal of caveat10608360.1BETWEEN ANZ BANK NEW ZEALAND LIMITEDApplicantAND LESLIE CARON TE KOOTIDefendantHearing: 7 February 2017Appearances: B M K Pamatatau for ApplicantRespondent in PersonJudgment: 7 February 2017JUDGMENT OF VENNING JThis judgment was delivered by me on 7 February 2017 at 4.45 pm, pursuant to Rule 11.5 of the HighCourt Rules.Registrar/Deputy RegistrarDateSolicitors: Gibson Sheat, WellingtonPark Legal, AucklandCopy to: B M K Pamatatau, AucklandRespondentIntroduction[1] The ANZ Bank New Zealand Limited (the Bank) seeks an order removing acaveat. Ms Te Kooti registered the caveat against a block of land at Okaka Road,Horeke, Kaikohe (the property). The Bank holds a first mortgage over the property,which is in the name of Tareha Richard Noakes (also known as Tareha RichardNoakes-Court). Mr Noakes fell into arrears under the mortgage. He was adjudicatedbankrupt on 16 October 2016.[2] On 19 October 2016 the Bank sold the property pursuant to its power of saleto Grahame Leslie for $215,000. Ms Te Kooti lodged her caveat against the propertyon 28 October 2016. The Bank seeks removal of the caveat to enable it to completethe sale to Mr Leslie. It proposes that the surplus proceeds be held on trust by theBank's solicitors until agreement whether they should be paid to the Official Assigneein Mr Noakes' bankruptcy or to anyone else claiming an interest in the land.Representation[3] The application for removal was served at Ms Te Kooti's address for service,c/- John Hall at Park Legal, Como Street, Takapuna, but Ms Te Kooti was notrepresented by counsel when the matter was called this morning.[4] Instead a person calling himself Tane Rakau sought to address the Court on theprinciples of Te Ture Whenua Maori Act 1993. I declined to hear from him as he isnot counsel. A Mr Geoff Smith who describes himself as a liquidator and creditor andequitable owner of the property also purported to appear on behalf of Ms Te Kooti.Mr Smith had prepared an unsworn affidavit which had been presented to the Court.[5] In the absence of counsel I told Ms Kooti I would hear from her but not fromanyone else purporting to address the Court on her behalf. Ms Te Kooti declined toaddress the Court. In dealing with the application I do however take account, to theextent it is relevant at all, the issues raised in the material presented to the Court byMr Smith.Analysis[6] The starting point is that as a registered mortgagee, the Bank has priority oversubsequent registered and unregistered equitable interests. It also has priority overprior unregistered equitable interests provided the Bank has not acted fraudulently inrespect of those prior interests. Such prior unregistered equitable interests are defeatedby the operation of law: s 62 and 182 of the Land Transfer Act 1952.[7] The interest Ms Te Kooti claims under the caveat is said to be:as cest que trust, of which the registered proprietor [Mr Noakes] is a trusteeand the Caveator is a beneficiary, in relation to a variation of deed ofacknowledge of debt dated 28 May 2001 under which the register proprietor[Mr Noakes] is an equitable mortgagor and the Caveator is the assignee ofcreditor and holds an express right to Caveat the title.I note that no copy of the purported trust deed has been put before the Court.[8] There is no evidence of fraud on the part of the Bank. Indeed there is noevidence the Bank was aware of Ms Te Kooti's claim at the time that it advancedmoneys to the registered proprietor Mr Noakes, who granted the mortgage over theproperty on 8 March 2001, which was subsequently registered on 30 May 2001.[9] Ms Alarcon, Bank Officer, deposes that there is nothing to suggest from theBank's lending file in 2001 that the Bank had any knowledge of the interest nowclaimed by Ms Te Kooti.[10] The Bank assisted Mr Noakes with finance to purchase the property fromOkaka Farms Limited.[11] At the relevant time Mr Noakes' solicitors undertook to the Bank that theBank's mortgage would be registered as a first and only mortgage.[12] The solicitors also provided a certificate confirming that, after making all dueinquiries, there was no other interest on the title to the property and that they had noknowledge of any interest yet to be registered on the Certificate of Title to the property.[13] The solicitor who lodged the caveat on behalf of Ms Te Kooti stated:The property was acquired by the current proprietor not through a standardterms agreement for sale and purchase of real estate but through a Deed ofAcknowledgment of Debt between the proprietor and a party whose interestshave been assigned to our client. ANZ in preparing to provide finance shouldhave been aware of this document in conducting its due diligence. Theconsideration provided under that Deed was considerably less than the valueof the property. A Trust Deed was signed on 7 June 2001 acknowledging thenature of ownership of the property as being in Trust. ANZ may not have beeninformed of this second Deed, however, ANZ should have been on notice tothe likelihood of its existence because of the substantial difference betweenthe amount loaned under the first Deed and the value of the property.[14] The letter acknowledges that the Bank may not have been informed of thepurported claimed interest. It makes no suggestion of fraud. The Bank's file and theevidence on behalf of the Bank is consistent with the Bank not having any notice ofan interest by Ms Te Kooti personally.[15] Ms Te Kooti was a director of Mr Noakes' vendor, Okaka Farms Limited. Thecompany was removed from the Register of Companies in 2004. There is nothing tosuggest that Okaka Farms Ltd or Ms Te Kooti had any remaining claim or interest inthe land after the transfer to Mr Noakes.[16] I can deal briefly with the matters purported to be raised on behalf of Ms TeKooti in Mr Smith's papers.[17] First there is a challenge to the validity of the loan agreement and mortgage.The loan agreement is a record of Mr Noakes' acceptance of the loan offer by theBank. The mortgage is in a form prescribed by the Land Transfer Act 1952. Thedocuments are valid.[18] Next, it is said the Property Law Act notices were not properly served. TheProperty Law Act notices were served in accordance with an order for substitutedservice obtained from the Court. Neither Mr Noakes nor the Official Assignee astrustee in bankruptcy has taken any issue with service of the notice, nor indeed thesubsequent steps taken by the Bank.[19] There is then a rather strange plea that in some way the default was resolvedby the tender of a bill of exchange for $68,900. Mr Smith forwarded a cheque to theBank with a letter dated 8 November 2016. As Ms Alarcon deposed the chequereferred to "being the sum certain of one New Zealand dollar" which was quitedifferent to the figure of $68,900 referred to. It was reasonable for the Bank to querythe legitimacy of such purported attempt to redeem the mortgage at that stage. In anyevent, the letter was sent after the Bank had agreed to sell the property and theequitable interest in it had transferred to the Bank's purchaser.[20] There is then an even more fanciful claim. By reference to the Cestui Que VieAct 1666 it is suggested that:In accordance with the Cestui Que Vie Act 1666, section 11, 18 & 19 liveswere lost at sea until returned to claim their account. Thereby the use of thisaccount named TAREHA RICHARD NOAKES has been removed from theliving man Tareha.That submission makes no sense whatsoever. The Cestui Que Vie Act 1666 and thebackground to it is interesting but it is not in force in New Zealand: Imperial LawsApplication Act 1988. Even if it was in force it does not have the extraordinary resultthe submission suggests.[21] Finally, at best, the claim that Ms Te Kooti raises is for a debt. In thosecircumstances there is no proper or reasoned basis to maintain the caveat given theBank's agreement that the caveat can be removed on the basis that if the caveat isremoved any surplus proceeds of sale will be held on trust by the Bank's solicitorsuntil there is agreement whether they should be paid to the Official Assignee in MrNoakes' bankruptcy or to anyone else claiming any interest in the land.Result[22] There will be an order in terms of the application removing the caveatdescribed in the Bank's application from the title.[23] The Bank is to have costs against Ms Te Kooti on a 2B basis.__________________________Venning J