RABOBANK NEW ZEALAND LIMITED V LAMBERT HC HAM CIV 2012-419-505

RABOBANK NEW ZEALAND LIMITED V LAMBERT HC HAM CIV 2012-419-505 [4 May 2012]IN THE HIGH COURT OF NEW ZEALANDHAMILTON REGISTRYCIV 2012-419-505[2012] NZHC 908IN THE MATTER OF section 143 of the Land Transfer Act 1952BETWEEN RABOBANK NEW ZEALAND LIMITEDPlaintiffAND ELIZABETH MARY LAMBERTDefendantHearing: 4 May 2012Counsel: KA McLuskie for plaintiffNo appearance for defendantJudgment: 4 May 2012(ORAL) JUDGMENT OF ASSOCIATE JUDGE FAIRE[on application that caveat not lapse]Solicitors: JT Law, PO Box 25 443, WellingtonTo: KA McLuskie, Tompkins Wake, PO Box 258, Hamilton 3240And To: ME Lambert, 31A Bailey Street, Huntly[1] The applicant applies for an order pursuant to s 143 of the Land Transfer Act 1952 that caveat number 9015227.1 lodged by the defendant against the lands in Certificate of Title 163997, 163998, 163999, 164000, 164001 and 164002 be removed and for orders for costs.[2] The application was given a date of hearing by me for today because of an impending sale which is being undertaken by the plaintiff, who is mortgagee of the relevant titles. The defendant apparently filed today in court a notice of opposition and an affidavit in opposition. She did not appear. Attempts were made to locate her, without success. I am satisfied that the defendant has been appropriately notified of the hearing date of this application but has apparently elected not to appear.[3] This application is made by a party who holds a registered mortgage over the subject titles and wishes to complete a sale pursuant to the exercise of its power of sale. The caveat that has been lodged against the title claims an estate or interest pursuant to a sale and purchase agreement dated 21 January 2012.[4] The applicable principles that apply when considering applications pursuant to s 143, 145 and 145 A of the Land Transfer Act 1952 are well known and can shortly be stated. They are:(a) Ss 143, 145 and 145A of the Land Transfer Act 1952 give no guide as to the circumstances in which the Court may make an order that a caveat not lapse: Catchpole v Burke;1(b) If it is clear that there was no valid ground for the lodging of a caveat, or that the interest which in the first place justified the lodging of the caveat no longer exists, such a caveat should be removed: Sims v Lowe;21 Catchpole v Burke [1974] 1 NZLR 620 (CA).2 Sims v Lowe [1988] 1 NZLR 656 (CA) at 659.(c) The onus under ss 143, 145 and 145A of the Land Transfer Act 1952 lies on the caveator to show that he has a reasonably arguable case for the interest he claims: Castlehill Run Ltd v NZI Finance Ltd;3(d) The caveat, being a creature of statute, may be lodged only by a person upon whom a right to lodge it has been conferred by statute. It is not enough to show that the lodging and continued existence of the caveat would be in some way advantageous to the caveator:Guardian Trust & Executor Co of New Zealand Ltd v Hall;4(e) What the caveator must establish is an arguable case for claiming an interest of the kind referred to in s 137 of the Land Transfer Act 1952;(f) Even if the caveator establishes an arguable case for the interest in the land claimed, the Court retains a discretion to make an order removing the caveat although it will be exercised cautiously: Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd.5[5] The defendant's caveat and the sale and purchase contract are bothsubsequent in time to the registration of the mortgage. No information has been placed before me that suggests there is any impediment to the exercise of theplaintiff's power of sale.[6] In Westpac Banking Corporation v Famularo I had to deal with a similar issue to that which arises in this case.6 I recorded at paragraph 6:What then is in issue is whether the interest acquired by Mr Famularo under his sale and purchase contract overrides the rights of the mortgagee and in particular, the right to effect the sale where a default has occurred. The short answer is, they cannot. The authority for that proposition is contained in the decision of McGechan J in National Mutual Finance (1988) Ltd v Berryman(High Court Wellington M451/91, 2 October 1991) and in the unreported decision in the Court of Appeal in Jensen v Jensen, Charles Aston Ltd & Anor (CA 246/90, 30 December 1990).3 Castle Hill Run Ltd v NZI Finance Ltd [1985] 2 NZLR 104 (CA) at 104–106.4 Guardian Trust & Executor Co of New Zealand Ltd v Hall [1938] NZLR 1020 (CA) at 1025, Callan J.5 Pacific Homes Ltd (in receivership) v Consolidated Joineries Ltd [1996] 2 NZLR 6526 Westpac Banking Corporation v Famularo HC Auckland M1092/98, 23 September 1998.[7] The registered mortgagee's title is paramount. That includes the mortgagee'sright to exercise its power of sale.7[8] Section 105 of the Land Transfer Act 1952 provides:105 Transfer by mortgageeUpon the registration of any transfer executed by a mortgagee for the purpose of [exercising a power of sale over any land], the estate or interest of the mortgagor therein expressed to be transferred shall pass to and vest in the purchaser, freed and discharged from all liability on account of the mortgage, or of any estate or interest except an estate or interest created by any instrument which has priority over the mortgage or which by reason of the consent of the mortgagee is binding on him.[9] The interest claimed in this caveat is an interest as purchaser under a sale and purchase contract and has no priority and is entitled to no protection in respect of the registration of any transfer executed by a mortgagee for the purpose of the exerciseof the mortgagee's power of sale over the land. In short, the registered proprietor's interest in the land ends with the transfer by the mortgagee to the mortgagee'spurchaser. From that point in time, nothing will support a caveat. When that position is taken into account the appropriate exercise of jurisdiction under s 143 of the Land Transfer Act 1952 is to make an order that provides for the lapsing of the caveat and its removal from the title upon the registration of a transfer by themortgagee to the mortgagee's purchaser, pursuant to the power of sale.[10] A sealed court order to that effect should answer any concerns that a prospective purchaser may have. Accordingly, I conclude it is appropriate to order that the caveat the subject of this application shall lapse and be removed from thesubject property's titles upon the registration of a transfer by the plaintiff to the plaintiff's purchaser pursuant to the plaintiff's exercise of its power of sale.[11] I order accordingly.[12] The applicant seeks indemnity costs. No information has been placed before me that would justify my making that order at this stage. I reserve costs but indicate7 Congregational Christian Church of Samoa Henderson Trust Board v Broadlands Finance Ltd[1984] 2 NZLR 704.that I would be prepared to make an order for costs based on 2B if that position is confirmed as appropriate by counsel for the plaintiff. Accordingly, a memorandum may be filed by counsel for the plaintiff and may then be referred to me. It should set out what costs based on Category 2 Band B are appropriate._____________________JA FaireAssociate Judge