MY TRUSTEE COMPANY (SOHO) LTD v MAGNA TRUST COMPANY LTD [2021] NZHC 3047

MY TRUSTEE COMPANY (SOHO) LTD v MAGNA TRUST COMPANY LTD [2021] NZHC 3047 [10November 2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-2079[2021] NZHC 3047UNDER Sections 119-120, 176, 279, 281, 288, 317,318, 327-329 of the Property Law Act 2007IN THE MATTER of an interim injunction restraining amortgagee sale of the propertyBETWEEN MY TRUSTEE COMPANY (SOHO) LTDApplicantAND MAGNA TRUST COMPANY LTDRespondentHearing: 10 November 2021 (via VMR)Counsel: C T Patterson for ApplicantP J Napier and A M Ryder for RespondentJudgment: 10 November 2021JUDGMENT OF BREWER JSolicitors:Lateral Lawyers Ltd (Auckland) for PlaintiffKeegan Alexander (Auckland) for Defendant[1] The applicant applies without notice for an interim injunction to halt themortgagee sale of a property which is scheduled for tomorrow. The respondent wasserved on a Pickwick basis and is represented by Mr Napier at today's hearing.[2] The background is that the applicant borrowed money from the respondent toassist with the development of a commercial property. The applicant purchased theproperty and has been developing it into separate apartments with a view to sellingthem for a profit. Unfortunately, there have been problems with getting the apartmentsinto a saleable condition. Problems with neighbours and with the title have resultedin an ongoing arbitration and a separate proceeding filed in this Court. The expectationis that the arbitrator can deliver his decision by the end of the year but the proceedingin this Court has yet to be allocated a trial date.[3] The statement of claim filed in the substantive proceeding contains two causesof action aimed at establishing grounds for a permanent injunction. The first is breachof mortgagee's duties. The submission is that if the mortgagee sale were to proceedtomorrow, then the respondent would be in breach of its duty pursuant to s 176 of theProperty Law Act 2007 to obtain the best price reasonably obtainable at the time ofthe sale.[4] The applicant points to the current Covid-19 lockdown. The submission is thatthe restrictions on free movement in Auckland during this period compromises theability of the respondent to obtain the best price reasonably obtainable for the property.Further, Lot 2 of the property is currently tenanted and occupied by people of Māorior Pasifika descent. They currently have a right to reasonably refuse entry to theapartments to third parties. They are currently exercising that right.[5] The second cause of action is in promissory estoppel. It is pleaded:29. In or about March 2021 the parties entered into an understanding oragreement in that the Defendant and/or its agent, Zagga Limited(New Zealand) ("Zagga"), promised that they would support thePlaintiff in pursuing the arbitration proceedings and Landlockproceedings to obtain the requisite easements (legal or equitable), tocompletion, and to fund or otherwise contribute to associated costsand expenses ("the Promise").[6] I note at this point that the interlocutory application and the substantiveproceeding are open-ended in terms of the duration of the injunctions sought. Thesecond cause of action seeks as relief, inter alia, a direction that the respondent mustimmediately take any and all steps to give effect to the promise. I infer that means adirection that Zagga supports the applicant in pursuing the arbitration proceedings andLandlock proceedings to obtain the requisite easements and to fund or otherwisecontribute to associated costs and expenses.[7] The first issue is whether the proceedings disclose a serious question to betried. I note that it is insufficient for an applicant to assert that there is a seriousquestion to be tried and to point to differences in factual positions. The applicant needsto demonstrate a real prospect of succeeding.[8] I have a real doubt as to whether there is a serious question to be tried:(a) As to the first cause of action, Mr Patterson for the applicant acceptsthat the obligation on a mortgagee under s 176 of the Property Law Act2007 focuses on the time of the sale. The Covid-19 lockdown regimehas nothing to do with the respondent. So long as within the constraintsof the Covid-19 lockdown regime the respondent has taken allreasonable steps to obtain the best price at the time of the sale, then itseems to me that the respondent will have fulfilled its obligations unders 176. It is not suggested that the respondent has failed to take suchsteps. It is alleged simply that the regime will necessarily reduce theprice that would otherwise be obtainable.(b) As to the promissory estoppel cause of action, Mr Patterson cannotpoint to a record of the promise. I have read the affidavit of Ms NicholaJane Keast in support of the interlocutory application. Her evidence is:47. Mr Marcus Morrison ("Mr Morrison") from Zaggapromised, or agreed, to take over the Applicant's debtdue under the Term Loan Agreement and to initiateand continue fund the pursuit of the Disputes and theLandlock Issue through actions in arbitration and inthe High Court ("the Promise"). Annexed marked"NJK1-16" are true copies of the correspondence anddocuments confirming Zagga's initial position.Mr Patterson submits that there is evidence that Zagga acted as theagent of the respondent.[9] I have looked at the attachments to which Ms Keast refers. There is nodocument evidencing a promise. There are simply documents that show thatMr Morrison tried to assist the applicant. Mr Patterson submits that this is evidenceconsistent with there being a promise.[10] I would have expected that if a businessperson, or indeed a mortgagee, haddecided to take over the obligations of a mortgagor and to pursue litigation andarbitration with a view to eventually securing titles to property which would make itmore valuable on resale, there would be at least a commercial document which wouldset out what the person taking over the obligations would get out of it. Mr Pattersonaccepts that there is no such document.[11] It follows that I do not see there is a serious question to be tried.[12] But, even if there were, I find that the balance of convenience favours therespondent. Really, what the applicant seeks is for the respondent to be deprived ofits ability to exercise its power of sale until an arbitration and a litigation have beenconcluded. It might be that if the arbitration and the litigation are concluded in favourof the applicant, and if in due course titles are issued which have the necessaryeasements, then there would be sufficient money to pay the respondent, even thoughinterest will have been accruing through the period.[13] But, this is a commercial transaction. If the interim injunction is refused andultimately on the substantive application the applicant succeeds, then damages wouldbe an adequate remedy. For that reason, I find the balance of convenience favours therespondent.[14] Standing back and looking at the issue of overall justice, I come back to thefact that this is a commercial transaction. The applicant borrowed money and thelender provided the money on a security underwritten by a mortgage. The applicanthas not been able to complete the development of the property in the time expectedand is continuing to battle to try to maximise its financial return. Unfortunately, itcannot meet the terms of its obligations to the respondent as mortgagee. There is aconsequence for that. The mortgagee is entitled to sell the property. In suchcircumstances, the interests of overall justice favour the commerciality of the situation.[15] Finally, although I do not consider this to be determinative, the undertaking asto damages relies entirely on there being a residual equity in the property sufficient tomeet any damages if the interim relief were granted. The value of the undertaking isnot established by evidence.[16] In all the above circumstances, I dismiss the applications for interim relief.[17] If there are issues as to costs which cannot be resolved between the parties,then memoranda must be filed within 10 working days of today's date.________________________________Brewer J