INSTANT FUNDING LIMITED V GREENWICH PROPERTY HOLDINGS LIMITED HC AK CIV 2007-404-006806

INSTANT FUNDING LIMITED V GREENWICH PROPERTY HOLDINGS LIMITED HC AK CIV 2007-404- 006806 20 December 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-006806IN THE MATTER OF Section 143 of the Land Transfer Act 1952 BETWEEN INSTANT FUNDING LIMITED Applicant AND GREENWICH PROPERTY HOLDINGS LIMITED Respondent Hearing: 19 December 2007 Appearances: D S McGill for Applicant S Grant for Respondent Judgment: 20 December 2007 at 2.30 p.m.JUDGMENT OF VENNING JThis judgment was delivered by me on 20 December 2007 at 2.30 pm, pursuant to Rule 540(4) of the High Court Rules. Registrar/Deputy Registrar DateSolicitors: Duncan Cotterill, Auckland Hornabrook Macdonald, Auckland Copy to: S Grant, AucklandIntroduction[1] In September 2005 Instant Funding advanced $7,500,000 to Monice Properties Limited to enable it to purchase a property at Sale Street. To secure the advance Monice granted Instant Funding a mortgage on its standard terms and conditions. The mortgage was registered against the title on 19 September 2005. The amount owing and secured by the mortgage was later reduced to $6,500,000. The loan was readvanced from time to time as it fell due. [2] In June 2006 Monice agreed to sell the Sale Street property to Greenwich Property Holdings Limited pursuant to a long-term agreement for sale and purchase. Settlement was due for 31 March 2007. On 12 September 2006 Greenwich registered a caveat against the title to record its interest under the agreement for sale and purchase. The purchase did not settle on 31 March 2007. [3] On 2 July 2007 Monice was placed into receivership. That put it in default under the terms of the mortgage. Monice also failed to pay the interest and rates due during July 2007. Instant Funding discussed assigning its mortgage to Vector Finance Limited, a company associated with Greenwich. But at the receivers request, it agreed not to proceed with that. [4] Instead Instant Funding exercised its powers as mortgagee and sold the Sale Street property by tender on 2 October 2007. Settlement is due for 21 December. [5] Instant Funding asked Greenwich to remove its caveat to facilitate settlement. Greenwich has refused to remove its caveat. Instant Funding seeks an order that the caveat be removed.General legal principles[6] Although Instant Funding is the applicant, the onus is on Greenwich to satisfy the Court that it has a reasonably arguable case to sustain the caveat: Sims v Lowe[1988] 1 NZLR 656. [7] As a purchaser of the property under an agreement for sale and purchase Greenwich has an equitable interest in the property that would prima facie sustain the caveat: Bevin v Smith [1994] 3 NZLR 648 (CA). The issue in the present case is whether that interest has been affected by the sale by Instant Funding as mortgagee. [8] Monice had the right to sell Sale Street to Greenwich or to any other party, but that right was subject to Instant Funding's rights as mortgagee which could not be displaced, in the absence of fraud under the Land Transfer Act, without Instant Funding's consent or without conduct which amounted to deferral of priority:Congregational Christian Church of Samoa Henderson Trust Board v Broadlands Finance Ltd [1984] 2 NZLR 704; National Mutual Finance (1988) Ltd v BerrymanHC WN M451/91, 2 October 1991, McGechan J); Jenssen v Jenssen CA246/90 13 December 1990, Charles Ashton Ltd & Anor (CA 246/90, unrep 13/12/90); NZ Fisheries Ltd v The Napier City Council (1990) 1 NZ ConvC 190,342; McDiarmid v Burton [1981] NZCPR 238, s 81(1) of the Property Law Act; s 104 and s 105 of the Land Transfer Act.Issues[9] The following issues arise in this case:• Did Instant Funding consent to the sale to Greenwich?• Should Instant Funding have its priority deferred in equity by its conduct?Did Instant Funding consent to the sale to Greenwich?[10] Although Ms Grant effectively conceded that Instant Funding had not consented to the sale to Greenwich, the issue of what constitutes consent and the evidence relating to that provides background to a number of the other grounds of opposition advanced by Ms Grant. For that reason I propose to deal with the concept of consent by a mortgagee to a later interest. [11] Clause 19 of the mortgage required the mortgagee's written consent to a sale by the mortgagor. Monice did not obtain written consent from Instant Funding for the sale to Greenwich. Nor did Greenwich seek Instant Funding's written consent as mortgagee to its purchase. [12] The issue of what constitutes consent for the purposes of s 105 of the Land Transfer Act was considered by the Court of Appeal in the case of NZ Fisheries Ltd v The Napier City Council. In that case NZ Fisheries had leased premises from Deep Sea Fisheries, the mortgagor. The mortgagee of the premises was aware of the lease. The mortgagor fell into default. The mortgagee exercised its power of sale and sold the property to the Napier City Council. NZ Fisheries sought to first block the sale and then sought a declaration that the lease to it remained valid on the grounds that the mortgagee had consented to the lease before sale. The mortgagee was aware that NZ Fisheries had taken on the lease. However the mortgagee was never formally approached for its consent to that arrangement. [13] The Court of Appeal cited with approval its earlier decision in Registered Securities Ltd v Christensen Potato Co Ltd CA121/88 1 September 1989 where Somers J had said:The onus lies on the tenant to show that the mortgagee must recognise his right of occupation mere knowledge by the mortgagee of the existence of the lease is not enough.[14] In NZ Fisheries the Court of Appeal confirmed that:"Consent" involves agreement to a proposal or request. Mere acquiescence in a state of affairs would not be enough.And later after referring to the decision of Bell v Alfred Franks and Bartlett Co Limited [1980] 1 All ER 356: acquiescence involves no more than the passive standing by without objection, whereas consent requires a positive affirmative act such as written or oral acceptance or even an implied acceptance by conduct. It is a consent of this nature which is required for a mortgagee to be bound under sec 105 and 119.[15] The evidence relied on by the caveator in this case is given by Mr Sutton and Mr Fong. Mr Sutton is a director of Greenwich. Mr Sutton does not directly address the issue of the consent or Instant Funding's actions other than to record that on 26 September 2006 (after Greenwich's caveat was registered) Instant Funding made a further advance to Monice of $6.5 million. He also says that after Greenwich took possession of the property on 30 June 2006 under the agreement for sale and purchase it spent in excess of $539,000 on the design and costing options for the redevelopment of the property. He says that full development reports relating to the property were provided from time to time to Bridgecorp Limited and Monice. [16] In a second affidavit, which Mr McGill did not object to, Mr Sutton also says that Monice encouraged Greenwich to press on with the work. Mr Sutton does not provide details of that assertion. But Mr Sutton detailed the expenditure spent on the property in the second affidavit at a total of $557,981. [17] Mr Sutton also says that after Monice went into receivership a company associated with him, Vector Finance Limited approached Instant Funding and offered to take an assignment of the mortgage to enable Greenwich to complete the purchase of the Sale Street property. Although Instant Funding was initially interested, and its solicitors provided a draft settlement statement for 24 August 2007, the receivers of Monice and Bridgecorp apparently persuaded Instant Funding not to proceed with the transfer of that mortgage. In an email to Mr Sutton's solicitors on 24 August 2007 Instant Funding's solicitors said "the receivers have asked us not to assign the mortgage to you. my client won't be entertaining an assignment for the time being "[18] Mr Fong is a solicitor who was, at the relevant time, legal manager of Bridgecorp. Mr Fong's evidence is that Instant Funding would have been aware of Greenwich's long-term agreement for sale and purchase. He says:I am confident that my advice was a strong consideration in Instant Funding agreeing to the requested extension.And:Overall, the agreement between Monice and Greenwich was not only known to Instant Funding, it was a benefit to it, in that it provided "take out" funding, and provided enhanced security.[19] In response Mr McOmish, a solicitor in a firm acting for Instant Funding at the relevant time, has confirmed that Mr Fong did advise Instant Funding of Greenwich's agreement for sale and purchase. Mr Fong forwarded an email to Instant Funding's broker and agent on 26 July 2006 to advise that a conditional agreement for the sale and purchase of the property at Sale Street had been entered and settlement was likely to occur 31 March 2007. But Mr McOmish says:This was not of concern to Instant Funding as it had a registered first mortgage over the property which it could act in reliance on in the event of default by Monice.[20] And in relation to the refinancing in September 2006 and March 2007 Mr McOmish says:The existence of that Agreement was not relevant to Instant Funding as the amount of indebtedness was only $6.5 million in respect of a property that had been sold to Monice at mortgagee sale for $8.253 million. Instant Funding was content with its security position and at that time Monice was meeting all interest payments.And later:The [agreement for sale of the property to Greenwich] did not provide "comfort" to Instant Funding in respect of extending the Monice term loan. The advances to Monice presented a good investment for Instant Funding which was receiving a good return on its investment and Monice was making all payments of interest as they fell due for payment. It was the security position that provided the "comfort" to Instant Funding [21] The evidence confirms that at no stage did either Monice or Greenwich approach Instant Funding to seek its formal consent to the sale to Greenwich. Theevidence does disclose that Instant Funding became aware of the agreement for sale and purchase, but after the agreement had been made. Instant Funding's knowledge of the sale is at most acquiescence to it (particularly as its knowledge came after the sale). Instant Funding's acquiescence in the sale falls well short of the consent required to lead to its loss of priority as mortgagee by actual consent.Should Instant Funding have its priority deferred in equity by its conduct?[22] But even absent consent, there may be circumstances where a mortgagee will be prevented by its conduct from asserting its rights under the mortgage against the holder of a subsequent or inferior interest. As McGechan J put it in the case ofNational Mutual Finance Ltd: "[there can be] conduct which in equity would be recognised as resulting in deferral of priority". [23] Ms Grant submitted that Instant Funding was not entitled to rely on its priority under the mortgage because it was reasonably arguable:• Instant Funding had been party to a fraud under the Land Transfer Act.• Instant Funding had knowingly assisted a breach of trust by Monice.• Instant Funding had placed a clog on Greenwich's equity of redemption as purchaser and prospective lessee in possession.• Instant Funding was estopped by proprietary estoppel from asserting its rights. Or• Instant Funding had wrongfully interfered with contractual relations and/or had engaged in unlawful means conspiracy. [24] The basis for Ms Grant's submissions is as follows. Instant Funding became aware of Greenwich's interest in the Sale Street property under the long-term agreement for sale and purchase. Instant Funding was also aware, from emails Mr Fong sent its solicitors, that the sale was subject to Greenwich obtaining resourceconsent which would require Greenwich to spend money on the property. In particular, in an email of 24 January 2007, Mr Fong had advised that [Mr Sutton] was "well advanced and working towards [the resource consent]". Ms Grant then submitted that given in August (after the receivership) Instant Funding was prepared to entertain a transfer of the mortgage to Vector Finance, a company associated with Mr Sutton and Greenwich, but did not proceed with that proposal because the receivers' requested it not to, the only logical inference to be drawn was that the receivers had offered some collateral benefit to Instant Funding Limited to do so, or that Instant Funding had agreed to assist the receivers to defeat Greenwich's interest in the property by selling to a third party, something that the receivers could not themselves do. [25] Ms Grant noted that there had been no response on Instant Funding's behalf to the requests for details of the sale price under the tender. Nor had Instant Funding responded in evidence and explained why it had not proceeded with the assignment to Vector Finance Limited. [26] Mr McGill submitted that Ms Grant's submission was speculative and that Instant Funding might simply have decided to optimise its position by allowing the mortgage to run on. The mortgage was in default and penalty interest applied. Mr McGill noted that Instant Funding was protected by its security position.Is there an arguable case for fraud under the Land Transfer Act?[27] Ms Grant submitted that it was arguable that Monice through its receivers intended to defeat Greenwich's interest in the property and that Instant Funding knew of this intention and had acted to assist the receivers to that end. She submitted that Instant Funding's knowledge and conduct in using its rights as mortgagee to give effect to the intention to defeat Greenwich's position was dishonest and a fraud for the purposes of s 62. [28] She referred to three cases to support her submission: Locher v Howlett & Ors (1894) 13 NZLR 584; Merrie v McKay (1897) 16 NZLR 124; and the recentdecision of Keane J in Lombard Finance and Investments Limited v Albert Street Limited & Anor HC AK CIV 2004-404-2120 14 October 2004. [29] Section 62 as relevant reads:62 Estate of registered proprietor paramount Notwithstanding the existence in any other person of any estate or interest, which but for this Act might be held to be paramount or to have priority, the registered proprietor of any estate or interest in land under the provisions of this Act shall, except in case of fraud, hold the same subject to such encumbrances, liens, estates, or interests as may be notified on the folium of the register constituted by the grant or certificate of title of the land, but absolutely free from all other encumbrances, liens, estates, or interests whatsoever, — [30] A Court will properly be cautious before finding fraud under the Land Transfer Act. Fraud under the Land Transfer Act is broader than the concepts of deceit and misrepresentation, but narrower than constructive or equitable fraud:Sutton v O'Kane [1973] 2 NZLR 304 (CA), 321 per Turner J. Mere knowledge of an existing right is insufficient: Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Company Ltd [1926] AC 101 (PC) 106-107. In Sutton v O'Kane the majority confirmed that the actions must be dishonest and dishonesty would not be assumed solely by reason of knowledge of an unregistered instrument. So the fact that Instant Funding became aware of Greenwich's agreement, and even that Greenwich had spent money in pursuing the resource consent would not be enough. More is required. [31] In Bunt v Hallinan [1985] 1 NZLR 450 (CA) the Court referred to the cases of Locher and Merrie, noting that in Locher Richmond J had characterised as dishonest, at 595-598 the taking of a registered interest, knowing that the holder of an unregistered interest is "improperly deprived" and that in Merrie, Prendergast CJ characterised as dishonest, at 127-128, an intent to "deprive" an unregistered holder of rights. [32] In Lombard Finance Lombard held a third mortgage over a property at Albert Street, Auckland. Prior to Lombard taking the third mortgage the then owner had entered long-term agreements for sale and purchase with Albert Street Limited andunder a succession of agreements for sale and purchase, Axis Wolfe Developments Limited. Lombard wanted to exercise its power of sale to achieve more from the sale than it would have if it were bound to the sale to Axis Wolfe. Lombard took the third mortgage with knowledge of Axis Wolfe's interest but before Axis Wolfe lodged a caveat over the property. [33] At law, Lombard had priority. The issue was whether Lombard's priority was defeasible because it had acted fraudulently by seeking to act on and rely on its priority in the circumstances. Keane J considered it arguable that when Lombard took the third mortgage it knew there was such inconsistency between the transactions into which the registered proprietor had entered that on giving the third mortgage the unregistered interests (the agreements for sale and purchase) would be, in the Judge's words "rendered a casualty". The Judge concluded he could not exclude the possibility that the registered proprietor acted dishonestly nor that Lombard Finance at least knew of it, accepted it and may have derived some advantage from it. [34] I conclude from those authorities that, subject to the issue of Instant Funding's dealing with the receiver it would otherwise have been entitled to have exercised its rights as mortgagee even though it knew Greenwich, as a holder of a subsequent interest, had spent money on the property. [35] It is only the suggestion that Instant Funding has acted, with or at the direction of the receivers, to deprive Greenwich of its rights (something the receivers themselves could not do) that could alter the position. As the Privy Council held inWaimiha:If the designed object of a transfer be to cheat a man of a known existing right, that is fraudulent [for the purposes of the Land Transfer Act]".In my judgment, in the particular circumstances of this case it is arguable that Instant Funding has acted in a way designed to defeat Greenwich's rights under its long- term agreement for sale and purchase and thus acted fraudulently for the purposes of the Land Transfer Act. I have come to that view for the following reasons:• Despite its prior interest, Instant Funding was initially content to allow Greenwich to complete its long-term agreement for sale and purchase, (even after the receivership) by assigning the mortgage to Vector Finance Limited (a company associated with Greenwich).• All Instant Funding had to gain as mortgagee was repayment of its principal, interest and costs. It would have recovered those by completing the assignment of the mortgage to Vector due for 24 August 2007. Mr McGill's suggestion that Instant Funding might have wanted to recover more penalty interest does not fit comfortably with Instant Funding's actions. It seems that on 21 August it was content to assign the mortgage to Vector and settle the assignment on 24 August. Also, the mortgagee sale did involve further delay and costs, which, even if covered by the security, were incurred for no apparent benefit to Instant Funding.• Mr McGill's written submission that a mortgagee sale was the obvious means for Instant Funding to recover the funds overlooks that it could have done so by simply completing the assignment to Vector.• On the current state of the evidence, the only thing that changed was that the receivers requested Instant Funding not to proceed with the assignment. Instant Funding acceded to that request. Why it did is not explained. Almost immediately after, Instant Funding proceeded to mortgage sale. The mortgagee sale had the effect of defeating Greenwich's interest in the property.• At the time that Instant Funding withdrew from the negotiations with Vector at the receiver's request, Instant Funding would have known that Greenwich was in possession and had spent money on the property (even if it did not know how much).• The receivers were bound to the sale to Greenwich. The only way Greenwich's interests under the agreement for sale and purchase could be set aside or defeated was by mortgagee sale. The inference open on the evidence, is that Instant Funding agreed to act in the way it did to deprive Greenwich of its interest and thereby enable the receivers to achieve a higher price for the property by sale toanother purchaser. The inference is that that was the only reason for Instant Funding not proceeding with the Vector assignment. As noted, why it did so remains unexplained.• It is relevant that there has been no attempt by anyone on behalf of Instant Funding to answer these allegations or to explain why it did not proceed with the assignment of its mortgage to Vector which would have seen it paid out. Mr Sutton raised the matter in his affidavit, but Mr McOmish did not address it in his affidavit in reply. Mr McGill's submissions do not directly address the point.• The test of dishonesty is a moral test: there must be something in the nature of moral turpitude: Stuart v Kingston (1923) 32 CLR 309, 329.• It is arguable that supervening fraud is sufficient to defeat an existing right:Webb v Hooper [1953] NZLR 111. [36] Until all the evidence is heard, it is arguable that Instant Funding acted, for whatever reason, with the receivers to defeat Greenwich's interest in the property to enable a later sale to a third party for more (and in doing so, to take advantage of the money Greenwich had spent on the property). In acting that way, Instant Funding has arguably committed a fraud under the Land Transfer Act.Knowing assistance of breach of trust[37] As I have found an arguable basis for retention of the caveat it is strictly unnecessary to deal with the other issues raised by Ms Grant. I refer to them briefly in deference to counsels' submissions. [38] Ms Grant next submitted that the conduct of the receivers in seeking to have Instant Funding proceed with the mortgagee sale rather than honour the contract under which Monice was bound and the resulting deprivation of Greenwich's rights would indicate to an honest and reasonable person in Instant Funding's position that Greenwich was being wrongfully deprived of its rights, which was sufficient to establish an arguable case of knowing assistance in breach of trust. The trust wassaid to arise from the fact Monice held the land as constructive trustee for Greenwich under the agreement for sale and purchase: Clarke v Ramuz [1891] 2 QB 456 CA. [39] Four elements are required for a knowing assistance claim:• the existence of a trust;• the existence of a dishonest and fraudulent design on the part of the trustees;• the assistance by a stranger; and• the knowledge of the stranger. [40] Accepting for present purposes Monice and its receivers were constructive trustees for Greenwich's interest in the property and that for argument's sake the receivers wished to defeat that claim, the issue is whether Instant Funding had sufficient knowledge of that wish. There must be dishonesty or want of probity on the part of Instant Funding: Royal Brunei Airlines SdnBhd v Tan [1995] 2 AC378;US International Marketing Limited v National Bank of New Zealand Limited [2004] 1 NZLR 589. As Tipping J put it in US International Marketing Limited at paras [7] and [8]:[7] The dishonest assistance criterion established by the Privy Council in Royal Brunei Airlines, and developed by the House of Lords inTwinsectra Ltd v Yardley [2002] AC 164 combines subjective and objective elements. The conduct of the person concerned is assessed in the light of what that person actually knew at the relevant time. Against these subjectively determined circumstances the honesty or otherwise of the person's conduct is objectively assessed. As Lord Nicholls of Birkenhead said in Royal Brunei Airlines at p 389 the standard of what constitutes honest conduct is not subjective. It is therefore the standard of what a reasonable person would regard as honest or dishonest in the relevant circumstances. [8] But following Twinsectra it is helpful, in order to avoid misunderstanding, to point out that in the United Kingdom there is a further element of what amounts to dishonest conduct. This element is subjective in that the person concerned must appreciate that their conduct is transgressing ordinary standards of honest behaviour, as Lord Hoffman put it inTwinsectra at p 170. We can leave for another day consideration of what effect, if any, Lord Millett's powerful dissent in Twinsectra might have on New Zealand law. Resolution of the present case is not affected by which approach is taken.[41] There is no direct evidence on this issue. But if the inference which I have drawn on the present facts is correct, namely, that Instant Funding acted in concert with the receivers to enable the receivers to defeat Greenwich's interest in order to achieve a higher sale price (and as part of that take advantage of the money Greenwich had spent towards obtaining a resource consent, which Monice was aware of), then that would be sufficient. Greenwich has a reasonably arguable case under this head as well.Clog on equity of redemption[42] Ms Grant next submitted that any party with an interest in the equity of redemption was entitled to redeem relying on the authority of Tarn v Turner CA [1888] 39 ChD 456. She noted that Greenwich was in possession not only as purchaser in possession but also as prospective lessee of the property under the ground lease. She submitted that Instant Funding's refusal to accept Vector's offer to take an assignment of the lease was a clog on the equity of redemption relying on the suggestion in Keech v Hall (1) Doug 21 that the right to redeem could be exercised by a tenant or by the tenant's "friend". [43] Section 81 of the Property Law Act provides statutory effect for the principle of the equity of redemption. The effect of s 81(1) is that a mortgagor is entitled to redeem the mortgage land at any time before the same has actually been sold by the mortgagee under his power of sale, on payment of all money due and owing under the mortgage at the time of payment. [44] The flaw in Ms Grant's argument under this head is that at no time did Monice or Greenwich seek to redeem the Sale Street property by payment of moneys owing under the mortgage to Instant Funding. Nor does s 81(1) contemplate a "friend" being entitled to redeem. The closest the matter came was the negotiation between Vector and Instant Funding for Vector to take over the mortgage. From the information on the file it seems the transaction was to be an assignment rather than a discharge of the mortgage itself. The assignment would not have had the effect of redeeming the land. The argument based on a clog on the equity of redemption byInstant Funding refusing to accept Vector's offer to take an assignment of the mortgage must fail.Proprietary estoppel[45] Next, Ms Grant raised proprietary estoppel. In Burbery Mortgage Finance & Savings Limited v Hindsbank Holdings Limited [1989] 1 NZLR 356 the Court of Appeal confirmed the application of the principle of equitable or promissory estoppel could apply to prevent, in that case, a receiver exercising a statutory right to distrain where the receiver had by his words or conduct made to the other party a clear and unequivocal promise or assurance intended to affect the relations between them and be acted upon. The Court held that when speaking to Mr Burbery (for the mortgagee and holder of a related instrument by way of security, ) the receiver had effectively asked Burbery to leave the chattels on the farms, he had done so in order to assist the receivers facilitate a sale of the farms but not to create a situation where the receiver would use to the disadvantage of Burbery. The Court considered that the only reasonable inference was that the receiver was representing that rights as between them (the receiver and mortgagee) would not be affected by Burbery's agreeing to that implied request. [46] The present case is quite different. There is no evidence of any such clear and unequivocal promise or assurance by Instant Funding intended to affect the relations between it and Greenwich or even for that matter Monice as mortgagor. [47] It is not relevant that Instant Funding re-advanced the loan moneys to Monice after it had become aware of the agreement for sale and purchase. The re-advance was secured under the existing terms of the mortgage. The mortgage terms included the provision that:2. "THE MONEYS HEREBY SECURED" DEFINED (a) In this mortgage, the expression "the moneys hereby secured" means all moneys which are now or shall hereafter from time to time be owing to the mortgagee: (i) by the mortgagor [48] The submission on behalf of Greenwich that the re-advance was only made because of the agreement for sale and purchase is no more than speculation on behalf of Mr Fong. He says that he is "confident" that his advice "was a strong consideration in Instant Funding agreeing to the requested extension". On the other hand Mr McOmish's evidence confirms that Instant Funding was content to roll-over the finance to Monice because it was a good deal. Until the receivership, Monice was meeting its obligations under the advance and Instant Funding had the security of the first mortgage. It was good business for Instant Funding. [49] Nor does the evidence suggest that the moneys that Greenwich spent on the property were spent with the approval of Instant Funding or with any encouragement by Instant Funding. Mr McOmish has confirmed that the:[E]xpenditure has been made without the knowledge or consent of Instant Funding [50] The argument based on proprietary estoppel must fail.Wrongful interference with contractual relations/conspiracy[51] Ms Grant finally submitted, in reliance on the authority of Jiao v Barge(unreported CA236/05 19 July 2006) that if parties conspire to misuse a power under a mortgage to interfere in a sale contract such conduct can constitute the tort of wrongful interference with a contract and also an unlawful means conspiracy. As Ms Grant accepted, however, Jiao was a quite different factual situation. It is only helpful as a recent statement of the principles. [52] Ms Grant nevertheless submitted there was interference with Greenwich's contract with Monice, and that the receivers wrongfully offered persuasion or interfered in the contract. The submission has a fundamental flaw in that the only contractual arrangement Instant Funding had with any party was with Monice as mortgagor. There never was a concluded agreement between Instant Funding and Vector that Instant Funding would assign its mortgage to Vector. There is no basis for an argument the receivers interfered with any contract Instant Funding was a party to.[53] Next, Ms Grant submitted that alternatively Instant Funding was a party to an unlawful means conspiracy and that there was an agreement made with intention to injure Greenwich by an act which was independently unlawful: SSC & B Lintas NZ Limited v Murphy [1986] 2 NZLR 436, 461. Ms Grant relied on the failure to give notice of the mortgagee sale as required by s 92(4) and (4A) of the Property Law Act as the unlawful act in reliance on Jiao and the commission of the tort of breach of contract. Section 92(4) requires the mortgagee to "forthwith after serving the notice on the owner" serve a copy of the notice on the subsequent mortgagee. In the present case it is apparent from the documents that Mr McGill presented to the Court that the notice was served on Greenwich. It is also clear that Greenwich was well aware of the process. There is no breach of contract in this case to support the allegation made. This ground would also fail.Summary[54] While Instant Funding learnt of the sale to Greenwich, it did not consent to it. At most, it merely acquiesced in it. In the absence of fraud or some other conduct leading to its deferral of priority Instant Funding would have been entitled to exercise its rights as mortgagee and sell the Sale Street property. [55] However, on the evidence as it stands and the reasonably available inference, Greenwich has a reasonably arguable case that in exercising its powers to sell as mortgagee Instant Funding was doing so at the direction of or by agreement with the receivers of Monice to enable the receivers to defeat Greenwich's interest in the property, which the receivers would not have been able to achieve without the assistance of Instant Funding. [56] There may be an innocent explanation for Instant Funding acting in the way it has. However at the moment there is a lack of evidence on that issue. Instant Funding has chosen not to respond directly on the issue. There is an inference that it was acting at the direction of the receivers to that end.General discretion[57] The Court has a residual discretion to order the removal of the caveat even where it finds an arguable case for its maintenance: Pacific Homes Limited (in receivership) v Consolidated Joineries Limited [1996] 2 NZLR 652 (CA). But the residual discretion will be only exercised in rare cases and where the caveator's interests can properly be protected. In this case the caveat supports an interest in the land rather than simply providing security for money. Greenwich will no doubt seek an order for specific performance of its agreement for sale and purchase. [58] The position of the purchaser at tender from Instant Funding, while a consideration, is not determinative. I note that the tender document provides an ability for Instant Funding to terminate that tender contract in certain circumstances. I conclude this is not an appropriate case for the exercise of the discretion to remove the caveat.Result[59] The application to remove the caveat must be dismissed. However I am conscious of the position Instant Funding is in as mortgagee. It may be as a result of the caveat remaining on the title Instant Funding will lose its existing contract with its purchaser under the tender. Mr McGill has advised that interest runs at $4,000 a day. Even with the security Instant Funding holds there is potential for loss. If ultimately, and after all the evidence is heard, it is determined that Greenwich had no basis to maintain its caveat, then Greenwich must accept the consequences of that.Orders[60] The application to remove the caveat will be dismissed on the conditions that: a) Greenwich is to provide an undertaking to pay damages in the form applicable to an application for interim injunction. That undertaking is to be filed and served by 4.00 p.m. on 21 December. In the eventthe undertaking is not filed and served by that time then the caveat will lapse. b) Greenwich is also to file and serve substantive proceedings to enforce its claim by 18 January 2008 and is to pursue those proceedings with diligence.Costs[61] Although Greenwich has succeeded in opposing the application to remove the caveat its success has been on grounds advanced in submission by Ms Grant which were not directly apparent as the focus of the amended notice of opposition. A number of the other grounds raised in the amended notice of opposition are either irrelevant or had no merit. In the circumstances costs are reserved to follow the outcome at trial. __________________________ Venning J