ANZ NATIONAL BANK LTD (FORMERLY KNOWN AS ANZ BANKING GROUP (NEW ZEALAND) LTD V NGARIMU HC ROT CIV 2006-463-124

ANZ NATIONAL BANK LTD (FORMERLY KNOWN AS ANZ BANKING GROUP (NEW ZEALAND) LTD V NGARIMU HC ROT CIV 2006-463-124 10 April 2006IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY CIV 2006-463-124BETWEEN ANZ NATIONAL BANK LIMITED (FORMERLY KNOWN AS ANZ BANKING GROUP (NEW ZEALAND) LIMITED) Applicant AND KATARINA ELLEN FORREST NGARIMU Respondent Hearing: 10 April 2006 Appearances: E Gooch for Applicant CM Bidois for Respondent M McKechnie for a party seeking leave to appear Judgment: 10 April 2006 at 5.00pmORAL JUDGMENT OF ASSOCIATE JUDGE D.H. ABBOTTSolicitors: Olphert Sandford, PO Box 99, Rotorua East Brewster, PO Box 1742, Rotorua MS McKechnie, PO Box 1227, Rotorua[1] The applicant has applied for an order that a caveat lodged against land at 30 Morey Street, Rotorua in which the respondent has an interest not lapse. [2] The caveat was lodged on the basis of an agreement entered into in August 1999 between the applicant and Gemini Hoani Ngarimu (then husband of the respondent). That agreement was expressed to be for a home loan for the sum of $80,500. It was expressed to be a loan for Mr Ngarimu solely but secured by mortgage against the property at 30 Morey Street. [3] The applicant claims that it has a caveatable interest by virtue of that agreement. [4] The respondent says that the applicant does not have an interest arising out of that loan agreement because the land was owned both by Gemini Ngarimu and the respondent as trustees of an Ahu Whenua Trust and she was not a party to the agreement and knew nothing of it until some years later. The respondent also says that the interest claimed in the caveat does not exist and that is fatal to the caveat in any event. [5] Before dealing with the application it was necessary to address two preliminary matters: a) By a third party seeking leave to appear and be heard; and b) By the applicant for an adjournment. Both applications were opposed by the respondent.Application for leave to appear[6] Counsel for a prospective assignee of the applicant's interest sought leave to appear. The prospective assignee is the solicitor who was instructed to act in thetransaction. Mr McKechnie appeared and made an oral application that the assignee be given leave to appear. Mr Bidois for the respondent opposed on the basis that the prospective assignee was not a named party, and any interest that he might have or acquire was through the applicant which was already represented. I accepted both of the points made by Mr Bidois. Leave was declined.Application for adjournment[7] Ms Gooch for the applicant sought an adjournment, in effect to give time for the applicant, and perhaps the prospective assignee, to address further information just obtained as to the circumstances of execution of the agreement to loan and as to the role of the prospective assignee. The precise information recently obtained was not made clear to me. It appears to be no more than a recent recognition that the applicant's security interest under the loan agreement was never perfected due to negligence by the solicitor acting. There was a further point put forward, being that up until the beginning of the day today Ms Gooch understood that the application was not to proceed and the change of instructions came only shortly before the hearing. [8] Again, Mr Bidois opposed. He submitted that a timetable had been set leading up to this hearing, there had been adequate notice, and the thrust of the adjournment appeared to be to allow the applicant to complete settlement arrangements with Gemini Ngarimu and then to facilitate the proposed assignment. Mr Bidois also submitted that any consideration of the adjournment had to balance respective interests and that there was considerable prejudice to the respondent by reason of her inability to refinance existing, acknowledged, indebtedness on the property. [9] Weighing the competing interests, I considered that there had been adequate opportunity to identify the underlying issues and put material before the Court. That appears to have been done, but for material concerning the proposed assignment. I do not consider that to be a basis for postponing the application. I declined the application for adjournment accordingly.Background[10] The land over which the caveat has been registered was, up until June 1999, Maori land. At that point it was separated from a larger block under a partition order and transferred into joint ownership of Gemini Ngarimu and the respondent as trustees of an Ahu Whenua Trust. The requisite orders were made in the Maori Land Court on 30 June 1999. As one of those orders the Court declared the previous Maori freehold land was to become general land. These orders were registered against the title in July 1999. [11] The loan agreement on which the caveat is based was entered into on 13 August 1999 between Mr Ngarimu and the applicant. It is clear that the applicant sought, and Mr Ngarimu agreed to, security for the loan by way of a mortgage over the Morey Street property. That did not occur, apparently through oversight on the part of the solicitor acting. It appears nothing further occurred in relation to this security interest until September 2005 when the applicant learned that the mortgage had not been created, or registered, and lodged the caveat which is the subject of this application. [12] It is not in dispute that the respondent did not sign the loan agreement, or that she is a co-owner of the property with Mr Ngarimu who did. [13] The issue for the Court is whether the applicant can claim a caveatable interest under the agreement to mortgage of 13 August 1999.Competing judgments[14] Ms Gooch put the applicant's case essentially on the basis that the respondent had to have known of the agreement and, as I understand it, by implication had agreed both to the loan and thereby to the agreement to mortgage. In this respect she refers to the process by which the title was changed from Maori land into general land in her name jointly with Mr Ngarimu. However, that is as far as she can take it on the facts before the Court. She, quite properly, conceded that the respondent was not a signatory to any of the documents giving effect to the change of status or theloan, or the registration of interests on the title (or, at least, not on any documents currently before the Court). [15] The applicant's case, put at its highest, can only be that Mr Ngarimu entered into the agreement to loan and to provide mortgage security with the respondent's authority. [16] In opposition to that, Mr Bidois made three principal points: a) The applicant can have no interest in the land because under s 227(1) Te Ture Whenua Maori Act 1993 the trustees (at least where there are only two) must act unanimously; b) Even if Mr Ngarimu is liable to the applicant, and agreed for his part to provide a security interest, the respondent cannot be forced to execute a mortgage as s 277(2) of Te Ture Whenua Maori Act 1993 requires any instrument registered under the Land Transfer Act 1952 to be executed by all trustees; c) In any event the caveat does not fully and accurately describe the interest the caveat was intended to protect in that it refers to an agreement to mortgage made between the applicant and Mr Ngarimu and the respondent, when that is not the case.Discussion[17] There is no question about the fact that the respondent has not signed the agreement. The issue for the Court is whether that fact is sufficient to say that Mr Ngarimu and the respondent have not acted unanimously, so as to bring into play s 227(1) of Te Ture Whenua Maori Act 1993. On the face of the documents before the Court, there might be thought to be grounds for holding that Mr Ngarimu and the respondent were acting together and unanimously in Mr Ngarimu seeking a loan. However, whilst there is clear documentation to support the respondent's knowledge of the transfer of the title into joint names, there is little to say that the respondenthad agreed to this loan. The most that can be found on that point is the application made to the Maori Land Court on 12 May 1999 (exhibit PR6 to the affidavit of Peter Rowland sworn in support of the application), that the trustees would apply to the Court for an order that the land revert to Maori freehold land upon repayment of "the mortgage now contemplated and the Trust then to terminate". That application was signed by Mr Ngarimu only. [18] As against that, there is the evidence given by the respondent in her affidavit in opposition to the application (sworn 3 March 2006) where she says:"I had absolutely no knowledge of the purported agreement to mortgage that the caveat is founded on until September 2005, when I learnt of the caveat."[19] The respondent states that she discovered the caveat while attempting to refinance the loan that is secured against the title. That is evidence given on oath. In the face of that evidence, I do not consider it open to the Court to infer anything to the contrary out of the one reference to a loan that I have mentioned (being the reference in the application to establish the Ahu Whenua Trust). [20] In light of that I find that the respondent is not a party to the loan agreement (even by implication) and hence there is no basis for relying on that agreement to support this caveat at least so far as she is concerned. [21] Given that finding, it is unnecessary for me to address the other points and I prefer not to make any finding in respect of Mr Bidois' submission under s 277(2) of Te Ture Whenua Act 1993 (particularly as Ms Gooch was not in a position to argue that point extensively here today). [22] However, I do feel that there is another basis on which I can determine this application. That is Mr Bidois' third point that the caveat does not adequately describe the interest being claimed. As I have already mentioned, the caveat refers to an agreement between the applicant and both Mr Ngarimu and the respondent. I have found that that is not the nature of the agreement. Accordingly, I find that the applicant has not fully and accurately described the interest which the caveat wasintended to protect and the application must fail on that basis: New Zealand Mortgage Guarantee Co Ltd v Pye [1979]) 2 NZLR 188.Application to register a further caveat[23] At the conclusion of argument, Ms Gooch made an oral application under r 148 of the Land Transfer Act 1952 for an order permitting the applicant to register a second caveat against the half share of Mr Ngarimu. There can be no doubt that there is a basis in the agreement of 13 August 1999 for a caveatable interest in respect of Mr Ngarimu's interest (although there may be an issue as to the extent of that interest).Orders[24] The application for an order that caveat X6577561.1 not lapse is dismissed. [25] The applicant has leave to register a second caveat against the interest of Gemini Hoani Ngarimu only.Costs[26] The respondent having succeeded is entitled to costs on a 2B basis, with disbursements as fixed by the Registrar. I note, for the purpose of comparing to actual, that the respondent's actual costs up to the commencement of this hearing were $2,277.49. If counsel cannot agree on the actual amounts to be awarded, they may submit memoranda within 14 days. _________________________Associate Judge D.H. Abbott