JONES V 74 ALBERT STREET LIMITED COA CA726/2011

JONES V 74 ALBERT STREET LIMITED COA CA726/2011 14 February 2012IN THE COURT OF APPEAL OF NEW ZEALANDCA726/2011[2012] NZCA 11BETWEEN CECELIA ELIZABETH JONESApplicantAND 74 ALBERT STREET LIMITEDRespondentHearing: 7 February 2012Court: Glazebrook, Wild and White JJCounsel: W T Nabney for ApplicantS J Corlett for RespondentJudgment: 14 February 2012 at 11:30 AMJUDGMENT OF THE COURTA The application for an extension of time to appeal is dismissed.B The applicant must pay the respondent costs for a standard application on a Band A basis with usual disbursements.___________________________________________________________________REASONS OF THE COURT(Given by White J)Introduction[1] Mrs Jones applies under r 29A for an order granting an extension of time to appeal against a judgment of Associate Judge Doogue in the High Court at Tauranga on 23 August 2011 ordering the removal of a notice of claim by Mrs Jones under s 43 of the Property (Relationships) Act 1976 (the Act) over her husband's farmproperty (the property).1Background[2] Mr and Mrs Jones live together on the farm property which is registered in his name. The property, which had an estimated value of $820,000 in February 2011, is subject to a mortgage to Westpac of approximately $450,000.[3] In 2006, apparently without his wife's knowledge, Mr Jones contracted with 74 Albert Street Ltd (74 ASL) to purchase three apartments, but failed to settle the purchases. In August 2010 74 ASL issued summary judgment proceedings against Mr Jones in the Tauranga High Court.[4] Before the summary judgment proceeding was determined, Mrs Jonesregistered her notice of claim over her husband's property on the basis of hermarriage to him.[5] In December 2010 74 ASL obtained summary judgment against Mr Jones for $610,246.95 and subsequently a final charging order over Mr Jones property for that amount.[6] In February 2011 Mrs Jones declined 74 ASL's request that she remove hernotice of claim.[7] In March 2011 Mrs Jones commenced Family Court proceedings seeking a number of orders, including an order for the division of the parties' relationship1 74 Albert Street Limited v Jones HC Tauranga CIV-2011-470-292, 23 August 2011.property "so as to achieve a just division of their property" in accordance with theAct and an order that she occupy the family home on the property.[8] In April 2011 74 ASL applied to the High Court for the removal of Mrs Jones's notice of claim over the property. After a defended hearing, AssociateJudge Doogue granted the application because to allow the notice to remain on thetitle would be of "no practical utility". The Associate Judge's reasons for thisconclusion were:(a) Under s 20B of the Act Mrs Jones's protected interest in her husband's property was $185,000, being half of the differencebetween the value of the property and the mortgage debt to Westpac.(b) On the assumption that Mrs Jones could seek an order for possession of the property, the utility of making such an order would depend on whether she had any long-term prospect of securing it.(c) Taking into account the amount of 74 ASL's judgment againstMr Jones, it was very doubtful that Mrs Jones as a retired superannuant would be able to arrange that level of funding and thereafter service the required borrowings.(d) While Mrs Jones had considerable merit on her side because she was not told about the circumstances in which her husband entered into the agreement with 74 ASL, it was unlikely that the rights of 74 ASL, as the creditor, under s 20A of the Act could be defeated by the Family Court application for possession of the property. There was therefore no practical likelihood of Mrs Jones obtaining possession of the property in the Family Court proceeding.(e) Mrs Jones's interest in the property would be properly protectedif the Registrar sold it.[9] The period for Mrs Jones to appeal against the High Court judgment expired on 20 September 2011.[10] On 3 October 2011 Westpac issued a Property Law Act notice against Mr Jones for failure to make mortgage repayments.[11] Mrs Jones applied to this Court on 31 October 2011 for leave to appeal out of time.[12] On 21 November 2011 Westpac advised that as the Property Law Act noticeremained unremedied the Bank would exercise its power of sale over Mr Jones'sproperty. On 12 December 2011 Westpac consented to 74 ASL enforcing the judgment debt by applying to the High Court for a sale order over the property. On 20 December 2011 Mrs Jones's notice of claim was removed from the property'stitle. On 21 December 2011 74 ASL obtained a sale order from the High Court inrelation to the sale of Mr Jones's assets, including the property.[13] It was anticipated that a sale of the property would occur in mid to late February 2012 and it was due to be auctioned on 23 February 2012. We were informed during the hearing that the auction is now scheduled for 1 March 2012.Application for leave[14] Mrs Jones's application for leave to appeal out of time is based on the following grounds:(a) While she was aware of the fact that she could file an appeal, the reason for not doing so was that she was not in a position at that time to raise any funds to pursue the appeal.(b) There was nothing in her conduct that should be taken as adverse to her application.(c) There was little prejudice to 74 ASL should the application be granted. There was greater prejudice to Mrs Jones and herfamily who lived on the property which had been in Mr Jones'sfamily for five generations. The property currently has two dwellings and a caravan and three families, including Mr and Mrs Jones, residing on it.(d) The prospective merits of the appeal favoured Mrs Jones because the Associate Judge had erred in considering that the outcome of the Family Court proceeding would not influenceMrs Jones's position, the debt incurred by Mr Jones was apersonal debt and Mrs Jones had an interest in the property which was more than just a financial interest. The effect of the Associate Judge's order was to give 74 ASL rights over theproperty that it was not entitled to. Allowing the notice of claim to remain on the title would be of practical utility in that it would preserve the position until the Family Court had properly determined the shares in the property.[15] The application was opposed by 74 ASL.Decision[16] For the following reasons, which largely reflect the submissions for 74 ASL, we decline the application for leave.[17] First, Mrs Jones's explanation for the delay of 41 days in filing her application for leave to appeal did not justify an extension. The ability of a prospective appellant to seek deferral of payment of security of costs under r 35(6)(d) means that the Court is unlikely to accept an inability to raise security as ajustification for not appealing in time. Mrs Jones, who had been represented by counsel throughout, would have been aware of her ability to apply for waiver of the filing fee and dispensing with security.[18] Second, both 74 ASL and Westpac would be materially prejudiced if theleave application were granted. The steps taken since the Associate Judge's decision to remove the notice of claim from the property's title and to obtain a sale order fromthe Tauranga High Court, as well as the mortgagee sale steps taken by Westpac, would have to be put on hold for no good reason.[19] Third, we agree with Associate Judge Doogue that it is unlikely that the rights of a creditor such as 74 ASL could be defeated by a claimant bringing an application for possession of property because that would deny access by the creditor to the assets which s 20A of the Act expressly contemplates would remain available to it. As Mr Nabney for Mrs Jones acknowledged in the course of argument, while she will be entitled to her protected interest of $185,000, she had no realistic ability to find the funds payable to Westpac for which she would in any event be liable. Her application for partition of the property would not prevent 74 ASL and Westpac from proceeding with the sale of the property and recovering their debts. Her appeal therefore has no real prospects of success.[20] Fourth, weighing up the various considerations we have referred to, and assessing where the overall interests of justice lie, our decision is to decline to extend time for appealing.Result[21] The application for an extension of time to appeal is dismissed.[22] Mrs Jones is to pay costs to 74 ASL for a standard application on a Band A basis and usual disbursements.Solicitors:Lyon O'Neale Arnold, Tauranga for ApplicantBrookfields, Auckland for Respondent