RE FAR NORTH DISTRICT COUNCIL [2021] NZHC 329

RE FAR NORTH DISTRICT COUNCIL [2021] NZHC 329 [1 March 2020]IN THE HIGH COURT OF NEW ZEALANDWHANGAREI REGISTRYI TE KŌTI MATUA O AOTEAROAWHANGĀREI-TERENGA-PARĀOA ROHECIV-2020-488-106[2021] NZHC 329UNDER section 110 Property Law Act 2007 and theHigh Court's inherent jurisdictionIN THE MATTER of an application for an order for redemptionBETWEEN FAR NORTH DISTRICT COUNCILApplicantHearing: On the papersCounsel: C Martin for the ApplicantJudgment: 1 March 2020JUDGMENT OF GAULT JThis judgment was delivered by me on 1 March 2020 at 4:00 p.m.pursuant to r 11.5 of the High Court Rules 1985.Registrar/Deputy RegistrarSolicitors:Mr C Martin, Henderson Reeves Connell Rishworth Lawyers Ltd, Whangarei[1] The Far North District Council (FNDC) seeks to discharge a mortgage over aproperty at 4 Te Kahikatoa Peninsula Road, Kaeo (the property).1 FNDC applieswithout notice for permission to commence this proceeding by way of originatingapplication. The substantive proceeding seeks the following orders in the alternative:(a) a declaration that all amounts secured by the mortgage have been paidin full, under ss 109 and 110 of the Property Law Act 2007 (the Act);or(b) an order that the mortgage be discharged, with that order having thesame effect as a duly executed mortgage discharge instrument unders 83 of the Act, pursuant either to s 111 of the Act or the Court's inherentjurisdiction.Background[2] FNDC is the current owner of the property, which was vested in it when itsucceeded the Whangaroa County Council (WCC).2[3] The relevant mortgage registered against the title to the property dates back to1974.3 The mortgagees, Mr William John Cameron Bond and Mr George Ernest JohnHutcherson, together with Mrs Mary Froude Bond, had purchased the land andoperated the Tauranga Bay Motor Camp on it. When they decided to retire, theydecided to sell the property to WCC at a reduced price as a gift with the intention thatit remain a motor camp rather than be split up for residential or commercialdevelopment.[4] The mortgagees reached an agreement with WCC whereby the property wastransferred to WCC and in return a mortgage was secured against the title in favour ofthe mortgagees. The mortgage secured a $52,550 debt plus interest, and themortgagees were to be paid half-yearly instalments of $1,800.1 More particularly described as Part Lot 1 Deposited Plan 54531, record of title NA26B/334.2 The Local Government (Northland Region) Reorganisation Order 1989.3 Memorandum of Mortgage 314246.3. As a result of the Local Government (Northland Region)Reorganisation Order 1989, any reference to WCC in any instrument or other document is to beread as a reference to FNDC.[5] Clause 18 of the mortgage agreement provided that notwithstanding that theamount owing under the mortgage shall not have been paid, the mortgagor's liabilityfor payment shall immediately cease and determine and the mortgagor shall be entitledto a discharge of the mortgage at the date of the death of the last surviving mortgageeand of Mrs Bond, subject only to:(a) the liability of the mortgagor to remedy any antecedent breach of themortgage; and(b) the mortgagor paying upon demand any death, succession or otherduties.[6] Mrs Bond died on 6 September 2004, Mr Bond died on 2 February 2005 andMr Hutcherson died on 28 November 2006. Following their deaths, a discharge of themortgage was provided to WCC – but it was never registered and now cannot be found.[7] FNDC wishes to have the mortgage discharged so it can grant a new registeredlease to the current operator.Leave to commence proceeding by originating application[8] This proceeding is not of a kind that can be commenced by way of originatingapplication as of right pursuant to rr 19.2 to 19.4 of the High Court Rules 2016.However, under r 19.5, the Court may permit any proceeding to be commenced byway of originating application if this would be in the interests of justice.Such permission may be sought without notice.4[9] As submitted by Mr Martin, counsel for FNDC, I consider it is in the interestsof justice for this matter to proceed by way of originating application. There isin reality no opposing party and a full statement of claim is not required.5 Themortgagees and Mrs Bond died many years ago, and clause 18 of the mortgage is clear.Indeed, a discharge of mortgage was provided at the time.4 High Court Rules 2016, r 19.5(2).5 Jones v HW Broe Ltd (1989) 5 PRNZ 206 (HC) at 207.[10] Accordingly, I grant leave to commence this proceeding by way of originatingapplication. I also accept Mr Martin's submission that there are no other interestedparties and so dispense with service.Substantive relief[11] It is appropriate to deal with the substantive application on the papers now,given it relates to a non-contentious and essentially procedural matter.[12] Section 109 of the Act provides that a mortgage may be discharged underss 110 and 111 if a person who is entitled to receive payment of the amounts securedby the mortgage is dead. Section 110 provides that the Court may make an order todetermine the amounts secured by the mortgage (and order that amount be paid intoCourt) or an order declaring that all amounts secured by the mortgage have been paidin full. Section 111 provides that a sealed copy of an order declaring that all amountssecured by the mortgage have been paid in full has effect as if it were a duly executedmortgage discharge instrument under s 83. In Country Hospitality Management (NZ)Ltd v McCullough, s 109 did not apply but Woodhouse J considered the Court haspower to make an order that will have the same effect as a duly executed mortgagedischarge instrument either under s 111 or the Court's inherent jurisdiction where thetotal amount owing and secured by the mortgage had been paid and the defendantshad failed or refused to provide a discharge of the mortgage.6[13] Here, FNDC no longer holds records confirming that all amounts secured bythe mortgage were repaid in full and that FNDC otherwise discharged its obligations.However, Mr Fountain, who was the solicitor acting for the mortgagees, confirms thathe provided a discharge to FNDC in 2006. To the best of his knowledge and belief,FNDC faithfully discharged its obligations under the mortgage agreement, and notaxes were incurred that would have been payable by FNDC pursuant to clause 18.[14] In those circumstances, whether or not all amounts secured by the mortgagehad been repaid in full, I am satisfied that FNDC was entitled to a discharge pursuantto clause 18 of the mortgage, that a discharge was indeed provided, and that the Court6 Country Hospitality Management (NZ) Ltd v McCullough [2012] NZHC 818 at [5]-[7].has power under the Act or its inherent jurisdiction to make an order that will have thesame effect as a duly executed mortgage discharge instrument under s 83. I acceptthat FNDC is entitled to a discharge of the mortgage.Orders[15] I make the following orders:(a) granting leave to commence this proceeding by way of originatingapplication; and(b) that mortgage 314246.3 registered against the title to the property at4 Te Kahikatoa Peninsula Road, Kaeo (Part Lot 1 Deposited Plan54531, record of title NA26B/334) be discharged.________________________________Gault J