HONG KONG AND SHANGHAI BANKING CORPORATION LTD V ERCEG AND ORS HC AK CIV 2009-404-004035

HONG KONG AND SHANGHAI BANKING CORPORATION LTD V ERCEG AND ORS HC AK CIV 2009-404-004035 14 October 2009IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2009-404-004035BETWEEN HONG KONG AND SHANGHAI BANKING CORPORATION LIMITED Plaintiff AND IVAN VLADIMAR JOSEPH ERCEG First Defendant AND SENSATION YACHTS LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION) Second Defendant AND SENSATION NEW ZEALAND LIMITED Third Defendant Hearing: 12 October 2009 Counsel: MD Arthur and BJ Burt for plaintiff PG Revell for first and third defendant Judgment: 14 October 2009 at 4:30 pmJUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for adjournment of summary judgment application]Solicitors: Chapman Tripp, PO Box 2206, Auckland for plaintiff Corban Revell, PO Box 21 180, Waitakere City for first and third defendants And To: Jollands Callander, PO Box 106 141, Auckland, receivers[1] The plaintiff applies for summary judgment against the first and third defendants. The plaintiff is the mortgagee of a property in respect of which the first defendant is the registered proprietor. The property is at 5-11 Selwood Road, Henderson, Auckland. [2] The plaintiff's application for summary judgment seeks orders for possession of the property at 5-11 Selwood Road, Henderson, Auckland and a declaration that that property is not subject to any lease to which the plaintiff, as mortgagee, has given its consent to. [3] On 31 July 2009 the second defendant was placed into liquidation by the High Court. As a result, no steps in this proceeding can be taken against the second defendant without the liquidator's agreement or an order of the Court. I have been provided with no agreement from the liquidator. No application for a Court order pursuant to s 248(1)(c) of the Companies Act 1993 has been made. [4] Both Mr Revell and Mr Jollands sought an adjournment of the application for summary judgment. After hearing submissions I declined both applications for adjournment and advised that I would give my reasons shortly. This enabled the application for summary judgment to proceed as scheduled. [5] I will deal with each application separately. Mr Revell gave advance notice of his application for an adjournment via a memorandum filed on the preceding Friday, that is, 9 October 2009. In that memorandum he drew attention to a settlement deed which is in the papers and which the plaintiff's credit manager said was executed on 16 March 2009. The document produced to the Court bears no date. [6] The importance of the settlement deed is that it contains evidence by way of a schedule of a sale and purchase contract entered into by the first defendant with his mother, Mrs Millie Erceg, for the sale of the property at 5-11 Selwood Road, Henderson. Under the deed of settlement the plaintiff consents to the first defendant entering into the sale agreement and confirms that it will provide a discharge of mortgage over the subject property to enable the sale to proceed on receipt of thesum of $5,615,000 (including the deposit payable under the sale and purchase contract). [7] Mr Erceg and his mother covenant that they will comply with the terms of the sale and purchase contract and will not vary or terminate that agreement without the prior written consent of the plaintiff. [8] The deed also permits the plaintiff to adopt the sale agreement pursuant s 179 of the Property Law Act 2007 but confirms that it is not obliged to do so. It contains deeming provisions in the event that the plaintiff adopts the sale and purchase contract. It also confirms that the plaintiff is not obliged to adopt the agreement and is entitled to exercise its power of sale. It also goes on to provide that upon settlement of the sale and purchase contract and receipt of $5,615,000 by the plaintiff, the dispute between the first defendant, the plaintiff and the second defendant shall be fully and finally settled. There are other provisions which I need not recount. Mrs Erceg has not settled in terms of the sale and purchase contract. [9] Mr Revell submitted that Mrs Erceg has a beneficial interest in the property and should therefore be a party to these proceedings. Currently she is not. In addition, he said, that there had been negotiations between the parties designed to effect a complete resolution of matters that are still extant. He submitted that an adjournment would allow consideration of those matters with a view to a successful conclusion being achieved. [10] The application is opposed. In opposing the application Mr Arthur submitted that Mrs Erceg's interest in the property would not be defeated provided she settles the sale and purchase contract and the moneys provided in the deed of settlement are paid to the plaintiff. If, in fact, Mrs Erceg settles the sale and purchase contract there would seem to be no reason why payment cannot be made to the plaintiff. He submitted, therefore, that the orders that were being sought in this summary judgment application cannot affect Mrs Erceg's position. The position might well be different if a mortgagee sale were undertaken.[11] The reasons advanced by Mr Arthur are correct and are a complete answer to the matters raised by Mr Revell. No basis has been put forward by Mr Revell to support the proposition that the plaintiff's rights under its mortgage are subject to rights allegedly arising under the deed of settlement. Accordingly, there is no justification on the matters advanced by Mr Revell for adjourning the application for summary judgment. [12] The position with respect to the second defendant is quite different. Mr Jollands simply sought further time to obtain advice from his chosen legal counsel who he advises is currently overseas. [13] The receivers, however, were served by letter dated 7 August 2009 with copies of the instant proceedings. A follow-up letter was sent advising them of this proceeding. The letter confirmed the position regarding the stay by the operation of s 248(1)(c) and the plaintiff's intentions. That is to leave the position in relation to the second defendant in that stayed position. [14] What is before me, therefore, is an application for an order for possession made against the registered proprietor and against the third defendant. The position of the second defendant cannot be the subject of any order I make. Its position is currently protected by the operation of s 248(1)(c) of the Companies Act 1993. That being the case, there is no need to adjourn the current application out of some concern for the position of the second defendant. [15] Accordingly, for the above reasons, the application for adjournment made on behalf of the first and third defendant by Mr Revell and on behalf of the receiver, having regard to his appointment in relation to the second defendant, are declined. _____________________ JA Faire Associate Judge