SPENCER ARTHUR LAWES AND ANOR V BANK OF NEW ZEALAND HC AK CIV 2009-404-001594

SPENCER ARTHUR LAWES AND ANOR V BANK OF NEW ZEALAND HC AK CIV 2009-404-001594 2 April 2009IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2009-404-001594IN THE MATTER OF A Claim under section 120(b) of the Credit Contracts and Consumer Finance Act 2003 BETWEEN SPENCER ARTHUR LAWES First Plaintiff AND SPENCER ARTHUR LAWES AND NOEL ERIC CRUMP (AS TRUSTEES FO THE S A LAWES FAMILY TRUST) Second Plaintiffs AND BANK OF NEW ZEALAND Defendant Hearing: 2 April 2009 Appearances: M G Locke for the Plaintiffs Z Kennedy and M Roberts for the Defendant Judgment: 2 April 2009ORAL JUDGMENT OF PRIESTLEY JCounsel: M G Locke, Barrister, P O Box 90915, Auckland Mail Centre,1142. Fax: 360-5327 Solicitors: West Auckland Law Office, P O Box 79 170, Royal Heights, Waitakere 0656 Fax: 416 7806 Z G Kennedy & M Roberts, Minter Ellison Rudd, Watts, P O Box 3798, Shortland Street, Auckland 1140. Fax: 353 9701[1] Mr Locke advises me that from the plaintiffs' standpoint there has been a successful outcome in terms of which the first plaintiff has been successful in securing finance elsewhere which will enable him to meet his current obligations to the Bank of New Zealand under its mortgage. [2] The first plaintiff's history as a mortgagor has given rise to legitimate concern. There have been many uncertainties. I note from the evidence before me that the Bank of New Zealand has extended to him many indulgences in respect of clear defaults over the last three years. [3] The first plaintiff's difficulties have been compounded by the fact that his former partner, as she was entitled to do, lodged a notice of claim against the title of the mortgaged property under the Property (Relationships) Act 1976. Counsel informed me from the Bar that despite the judgment of Judge Mather delivered in the Waitakere Family Court on 19 November 2008 the first plaintiff has now been successful in obtaining an order that the notice of claim can be lifted for refinancing purposes. [4] The current secured amount owing to the Bank of New Zealand is $463,000 plus costs. I have been told from the Bar by Mr Locke that arrangements are now in place which will enable the plaintiffs to refinance the mortgage and that the refinancing sum will be available tomorrow (3 April 2009). [5] The Bank of New Zealand's position is difficult and I record the fact that its counsel has acted with absolute propriety in this situation. Given the clear breaches of the mortgage the Bank was entitled to exercise its power of sale. It has exercised that power by seeking tenders in respect of the mortgaged property. The successful tenderer, at an agreed sum of $888,000 was K Chuang or nominee. Prudently the Bank when exercising its powers of sale incorporated a provision, as a term of sale, that if an injunction order were made restraining the vendor from completing the sale then the settlement date must be deferred until the third working day after the injunction has been discharged or removed.[6] Many injunctions of course in this situation remain in force. The agreement between the Bank and the purchaser thus further provides that the Bank is entitled by notice in writing to cancel the agreement. [7] The Bank's primary argument on the substantive matter, if it were to proceed, would be that by the virtue of the Bank having exercised its power of sale and entering into a binding arrangement (the tender) to sell, the plaintiff has lost his right of redemption. Significantly here the plaintiff is seeking injunctive relief precisely in terms of the relevant contract between the Bank and the successful tenderer. [8] Mr Kennedy accepts that this Court has overarching equitable powers and that although as a matter of contract between mortgagee and mortgagor the right of redemption may have been lost, the interests of the mortgagor and the prospect of him being able to repay outstanding secured sums to the Bank are matters which can be properly weighed in addition to the rights of the conditional purchaser under the mortgagee sale. [9] Very properly Mr Kennedy is not in a position to consent to the order I am to make. But he realistically takes the view that given the competing equitable matters to which I have just referred he is not in a position to oppose the order. [10] Given the imminent prospect of a successful refinancing it seems to me appropriate that I should grant the injunction as moved, but on the condition that all secured sums under the mortgage to the defendant are to be repaid by 5 pm tomorrow (3 April 2009). If that condition is not met then clearly the injunction at that stage will come to an end and the path would be clear for the defendant to conclude the sale. If, however, the condition is met by 5 pm tomorrow then it would seem that the obligation of the defendant to sell to the successful tenderer comes to an end. And of course the Bank's mortgage, all secured sums having been repaid, must be discharged. [11] There would then only remain the plaintiffs' substantive proceeding. Mr Locke is of the view that on settlement the substantive claim can be discontinued. To give sufficient time to attend to this I adjourn the substantive proceeding to theDuty Judge List at 10 am on Wednesday 8 April 2009. In the event of a notice of discontinuance being filed by 5 pm the previous day by Mr Locke I direct the mentions hearing is to be vacated and appearances excused................................. Priestley J