CHEW v LAU [2019] NZHC 2290

CHEW v LAU [2019] NZHC 2290 [12 September 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-1573[2019] NZHC 2290UNDER Part 19 of the High Court Rules 2016AND UNDER Section 142 of the Land Transfer Act 2017IN THE MATTER of an application to remove a caveat andother encumbrances from CT NA446/235BETWEEN TONY LIM TZE CHEW as administrator ofthe estate of Lim Thiam HongApplicantAND SIIK KEE LAUFirst RespondentEE KUOH LAUSecond RespondentContHearing: 12 September 2019Appearances: B Rooney for ApplicantNo appearance for RespondentsJudgment: 12 September 2019JUDGMENT OF LANG J[on application for orders under s 142 Land Transfer Act 2017]OFFICIAL ASSIGNEE FOR THEESTATES IN BANKRUPTCY OFSHIRELLEN SHIA LING SIM andEE KUOH LAUThird RespondentSECRETARY FOR THE TREASURYin respect of any disclaimed assets ofSHIRLEEN SHIA LING SIM and anyassets of MONCRIEFF PASTORALLIMITED (A COMPANYREMOVED FROM THE REGISTEROF COMPANIES)Fourth RespondentThis judgment was delivered by me on 12 September 2019 at 3.30 pm,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate[1] This proceeding concerns a parcel of bare land situated at 672 Mount AlbertRoad, Auckland (the property).1 Ms Shirleen Shia Ling Sim (Ms Sim) has been theregistered owner of the property since 2000.[2] Ms Sim lived for some time with her husband Mr Ee Kuoh (Augustine) Lau ina house erected on the property following her marriage to Mr Lau. When theyseparated Ms Sim and Mr Lau both moved out of the property. Mr Lau then usedrental income received from the property to maintain the mortgage payments owingto the first mortgagee, the TSB Bank Limited.[3] Ms Sim deposes that her late grandfather, Mr Lim Thiam Hong, loaned her thesum of $200,000 to assist her to purchase the property in September 2000. Thisrepresented Mr Hong's life savings. Ms Sim was to repay the loan, together withsimple interest calculated at the rate of ten per cent per annum, when she was able todo so or when required to do so by her grandfather. Ms Sim says she has never beenable to repay the loan. She now owes the sum of approximately $600,000 to the estate.This debt is the only asset held by Mr Hong's estate.[4] The loan from Mr Hong was not documented until 2005. In that year Ms Simexecuted an agreement to mortgage the property in favour of her grandfather and hethen lodged a caveat against the title to the property to protect his interest under theagreement.[5] Mr Lau was ultimately prosecuted by the Auckland Council for carrying outunauthorised alterations to the house on the property. He received a sentence ofimprisonment on those charges. Ms Sim then arranged for the house to be demolishedto avoid the Council prosecuting her as well. Thereafter the property ceased to deriveany income and Ms Sim has had no means of meeting the outgoings on the property.[6] Ms Sim was adjudicated bankrupt in 2016, but the Official Assignee took nosteps to sell the property because he considered there was unlikely to be any equity init. Ms Sim has now been discharged from bankruptcy and wishes to sell the propertyto repay her secured creditors. In order to do so she needs to be able to provide any1 Being the land described in Identifier NA/446235 (North Auckland Land Registry).purchaser with clear title. At present that is not possible because of severalencumbrances registered on the title.[7] Ms Sim does not have the financial resources to fund an action to have theencumbrances removed. Mr Chew, the administrator of Mr Hong's estate, hastherefore filed the present proceeding seeking orders under s 142 of the Land TransferAct 2017 removing all but four of the encumbrances from the title.[8] All of the parties who have registered encumbrances against the title to theproperty have been served with the proceeding. New Zealand Home Bonds Limitedhas filed a notice of appearance preserving its rights, but no other party has taken anysteps to defend the proceeding.The application[9] The following encumbrances are registered against the title to the property:(a) Mortgage in favour of the TSB Bank, registered on 5 February 2004.(b) Caveat by New Zealand Home Bonds Limited, registered on22 September 2004.(c) Caveat by Tien Pick Ing, registered on 4 March 2005(d) Caveat by Lim Thiam Hong, registered on 16 February 2010.(e) Notice of claim of interest under s 42(2) of the Property (Relationships)Act 1976, registered by Ee Kuoh Lau on 8 March 2010.(f) Charging order absolute in favour of Moncrieff Pastoral Limited,registered on 6 September 2010.(g) Statutory land charge under s 32 of the Legal Services Act 2000,registered on 20 April 2011.[10] The mortgage to the TSB Bank secures borrowings of approximately$300,000, whilst the caveat in favour of New Zealand Home Bonds Ltd relates to anagreement to mortgage securing advances totalling approximately $200,000. Thestatutory charge under the Legal Services Act 2000 charges the property to secure legalaid costs totalling approximately $3,000 paid by the Legal Services Agency on MsSim's behalf. Ms Sim and the applicant accept that these three encumbrances arevalid, and that the proceeds of any sale of the property will need to satisfy the intereststhey protect before being available to meet Ms Sim's obligations under the remainingencumbrances.[11] The applicant now seeks orders removing the caveat registered by Tien PickIng, the notice of claim of interest registered by Mr Lau and the charging orderregistered in favour of Moncrieff Pastoral Limited. If the application succeeds inrelation to the caveat registered by Tien Pick Ing, the caveat registered by Mr Hongwould be next in order of priority.[12] The property is estimated to have a current market value of between $1.04 and$1.317 million. Depending on the sale price achieved, the proceeds of any sale arelikely to be sufficient to repay the TSB Bank, New Zealand Home Bonds Limited, theLegal Services Agency and the estate of Mr Hong.The test[13] The test to be applied in the present context is whether the holder of theencumbrance can establish a reasonably arguable case for the interest protected by theencumbrance.2 The encumbrance will be removed if it is "patently clear that the caveatcannot be maintained either because there was no valid ground for lodging it or thatsuch valid ground as then existed no longer does so."32 Sims v Lowe [1988] 1 NZLR 656.3 At 659-660.The caveat registered by Tien Pick Ing[14] This caveat is signed by Mr Lau "as agent" for Tien Pick Tien. Although MrLau appears to have held a power of attorney given in his favour by Tien Pick Ing hedid not sign the caveat as her attorney.[15] The caveat purports to protect interests created by a term loan contract and anagreement for sale and purchase of the property under which Tien Pick Ing is stated tobe the lender and purchaser respectively. Ms Sim is correspondingly said to havesigned the documents as borrower and vendor. Ms Sim deposes, however, that shenever signed either of these documents, and that the signatures attributed to her are nother signatures. Furthermore, Ms Lim says she has never borrowed or received anymoney from Tien Pick Ing and has never agreed to sell the property to her. Ms Simhas also produced a statement from an expert document examiner who says thesignatures on the term loan contract and the agreement for sale and purchase were notthose of Ms Sim.[16] Furthermore, Ms Sim says that for many years Mr Lau signed documents inher name to enable him to buy properties and borrow money. At one stage she alsogave Mr Lau a power of attorney to act on her behalf.[17] In addition, Ms Sim's signature on the term loan contract purports to bewitnessed by a person named Ann Yiin. Ms Sim says Ms Yiin is Mr Lau's mother,and Ms Sim maintains she has never signed any legal documents in Ms Yiin'spresence. Ms Sim also believes Ms Yiin is still involved with Mr Lau and his propertydealings. Earlier this year she received a telephone message from a lawyer purportingto act for Ms Yiin in which the lawyer raised the possibility that Ms Yiin mightpurchase the property from Ms Sim. Thereafter, however, Ms Sim never received anywritten offer by Ms Yiin to purchase the property.[18] Ms Sim has produced evidence that Madam Tien died intestate in Malaysia in2011. She has spoken to members of Madam Tien's family in Malaysia, and has beentold that the family are not aware of any debt owing by Ms Sim to Tien Pick Ing'sestate.[19] Taking all these matters into account I am satisfied it is more likely than notthat Mr Lau signed the documents in Ms Sim's name and without her authority. I amalso satisfied that Tien Pick Ing did not lend any money to Ms Sim as the documentsallege. Furthermore, the documents do not create any caveatable interest in theproperty because they do not charge the property with payment of the debt.[20] The application must therefore succeed in relation to the caveat registered byTien Pick Ing.Notice of claim of interest registered by Mr Lau[21] Mr Lau did not make any claim or file a proof of debt in Ms Sim's bankruptcyin 2016. Mr Lau was himself adjudicated bankrupt in 2018. The Official Assigneehas not advanced any claim against the property on Mr Lau's behalf and has taken nosteps to defend the present proceeding.[22] Any claim Mr Lau may have had vested in the Official Assignee upon Mr Lau'sadjudication. Mr Lau does not have any ability to advance a claim in his right at thispoint. There is no evidence Mr Lau or the Official Assignee have sought to advanceany claim in either this Court or the Family Court. The Official Assignee has alsoconfirmed in a letter to the applicant's counsel that he does not oppose the presentapplication. I am therefore satisfied the notice of claim does not currently protect avalid interest in the property. It must accordingly be removed.Charging order lodged by Moncrieff Pastoral Ltd[23] The charging order was obtained in proceedings brought in this Court byMoncrieff Pastoral Ltd against Ms Sim. The claim was based on documents signedby Mr Lau in Ms Sim's name.[24] The charging order was registered against the title in 2010 and accordinglylapsed by operation of law in 2012.4 It no longer binds the land affected and isdischarged unless it is extended by the Court. No application for extension has been4 High Court Rules 2016, r 17.52.made. Furthermore, Moncrieff has now been struck off the Register of Companiesand it did not file a proof of debt in Ms Sim's bankruptcy.[25] It is therefore appropriate to make an order removing the charging order fromthe title to the property.Result[26] I make orders under s 142 of the Land Transfer Act 2017 removing thefollowing encumbrances from Identifier NA446/235:(a) Caveat No. 6334737.1 registered by Tien Pick Ing on 4 March 2005.(b) Notice of claim 8427338.1 registered by Ee Kuoh Lau on 8 March2010.(c) Charging order absolute No. 8584782.1 registered by MoncrieffPastoral Limited on 6 September 2010.Costs[27] I make no order as to costs.Lang J