JULIAN PAUL BURKE AND GILLIAN ELIZABETH BURKE V ASL MORTGAGES LIMITED CA CA697/2008

JULIAN PAUL BURKE AND GILLIAN ELIZABETH BURKE V ASL MORTGAGES LIMITED CA CA697/2008 1 December 2008IN THE COURT OF APPEAL OF NEW ZEALAND CA697/2008 [2008] NZCA 511BETWEEN JULIAN PAUL BURKE AND GILLIAN ELIZABETH BURKE Appellants AND ASL MORTGAGES LIMITED Respondent Hearing: 20 November 2008 Court: William Young P, Wild and Priestley JJ Counsel: Appellants in person T M Braun for Respondent Judgment: 1 December 2008 at 12 noonJUDGMENT OF THE COURT A The application for a stay is dismissed. B The appellants must pay costs for a standard appeal on a band A basis along with usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by William Young P)[1] The appellants have appealed against a judgment of Associate Judge Doogue delivered on 13 October 2008 in which he made an order for possession in favour of ASL Mortgages Ltd. They seek a stay of that order pending determination of the appeal. [2] Mr and Mrs Burke owe ASL in excess of $1 million, which is secured over various parcels of land. ASL is anxious to sell the properties. Associated with this, it wishes to obtain possession of the affected land. A complicating factor is that one of the parcels of land over which ASL has security ("the original lot 1") was subsequently amalgamated with other land over which ASL does not have security. ASL sought and obtained in the High Court summary judgment for what is owed and possession. As a result of a drafting error, the order for possession as sealed extended to the whole of the amalgamated lot. [3] Mr and Mrs Burke's appeal to this Court was unsuccessful save that the possession order in relation to the amalgamated lot was set aside. Leave was reserved to ASL to apply to the High Court for possession of that part of the amalgamated lot 1 which is subject to its mortgage: Burke v Advanced Securities Ltd(2008) 8 NZBLC 102,263. The Supreme Court has recently dismissed an application for leave to appeal against that decision: Burke v ASL Mortgages Ltd[2008] NZSC 96. [4] ASL went back to the High Court and in the judgment presently under appeal obtained an order for possession which defines the area over which ASL has security and to which it is entitled to possession. It did so by reference to the boundaries of the original lot 1. That portion of the amalgamated lot which lies outside the boundaries of the original lot 1 ("the excluded land") has been excluded from the effect of the order. [5] Arising out of all of this, there are two distinct issues: (a) ASL's right to possession of the land over which it has security; and (b) ASL's ability to sell the land over which it has security.[6] ASL's approach to the latter issue is not before us except indirectly. It has acquired a separate mortgage in favour of Basecorp Finance Ltd, which is over the entire amalgamated lot, and has proposed to exercise the power of sale under this mortgage to sell the land. The ability of ASL to proceed in this particular way has been the subject of a judgment of Venning J delivered on 30 October 2008 in which he granted an injunction preventing ASL exercising the power of a sale under the Basecorp mortgage. This was because at the time ASL had not finalised its acquisition of the Basecorp mortgage. Mr Braun told us that this has now been completed and that ASL will be seeking rescission of the injunction. In response to that, Mr Burke said that he and Mrs Burke would contend that the course of action proposed by ASL is inconsistent with the terms of their agreement with Basecorp. The details of the associated arguments were fleshed out in a memorandum from Mr and Mrs Burke which was lodged on 24 November 2008. But we see these arguments as being for another day. Nonetheless, the dispute about the enforceability of the Basecorp mortgage, along with the fact that statutory notice has yet to be given under that mortgage, suggest that a sale of the amalgamated lot is not imminent. [7] In that same judgment, Venning J declined to stay the order made by Associate Judge Doogue presently under appeal except that he gave Mr and Mrs Burke some time (ten days) to make alternative arrangements for themselves and their stock. [8] The basis of the appeal against the order made on 13 October 2008 is it creates "landlocked land" (being the excluded land) and is inconsistent with the Resource Management Act 1991 and the legal consequences of the earlier amalgamation. [9] There is no merit in the grounds of appeal. [10] It may be that, on a reasonably literal construction of s 326 of the Property Law Act 2007, the excluded land will become "landlocked" upon implementation of the order for possession and will remain so until the security position over the amalgamated lot is resolved. But if this is so, it is irrelevant. There is no legislativeproscription against the creation of landlocked land and the 2007 Act provides mechanisms for dealing with any practical difficulties which might arise. [11] The order for possession is not a subdivision and its enforcement will also not amount to a subdivision. There is thus no inconsistency between the Resource Management Act 1991 and the course taken by the Associate Judge (ie of defining the land which is subject to the order by reference to the boundaries of the original lot 1). Nor is there any inconsistency with the Land Transfer Act 1952. [12] Given the likely delays before a sale of the amalgamated lot can be effected, the practical impact of granting a stay would be comparatively limited. However, in light of the lack of merit in the appeal, this is not the controlling consideration. [13] Accordingly the application for a stay is dismissed. The appellants must pay costs for a standard appeal on a band A basis along with usual disbursements.Solicitors: Harkness Henry & Co, Hamilton for Respondent