GP96 Ltd v PVG Securities Trustee Ltd; GP96 Ltd v F M Custodians Ltd
| Jurisdiction | New Zealand |
| Judge | Wylie J |
| Judgment Date | 23 July 2019 |
| Neutral Citation | [2019] NZCA 325 |
| Court | Court of Appeal |
| Docket Number | CA258/2019 |
| Date | 23 July 2019 |
[2019] NZCA 325
Gilbert, Wylie and Thomas JJ
CA258/2019
CA272/2019
IN THE COURT OF APPEAL OF NEW ZEALAND
I TE KŌTI PĪRA O AOTEAROA
Criminal Procedure — second appeals — in what circumstances will the Court of Appeal revisit its own final decisions — Criminal Procedure Act 2011
A R B Barker QC for Appellant
K C Francis for First Respondent in CA258/2019
J E Bayley for Second Respondent in CA258/2019 and Respondent in CA272/2019
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A The appeal in CA258/2019 is dismissed.
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B The appeal in CA272/2019 is dismissed.
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C In CA258/2019, the appellant must pay costs to each respondent for a standard appeal on a band A basis and usual disbursements.
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D In CA272/2019, the appellant must pay costs to the respondent for a standard appeal on a band A basis and usual disbursements.
(Given by Wylie J)
There are two appeals before the Court arising out of separate proceedings but both involving the same transaction. Both appeals are against a decision given by Gendall J on 28 May 2019 in the High Court at Christchurch. 1
In appeal CA258/2019, the appellant, GP96 Ltd (“GP96”), appeals Gendall J's decision to:
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(a) grant an application made by the first respondent, PVG Securities Trustee Ltd (“PVG”) and order removal of a caveat lodged by GP96 against one of two titles to a property situated at 96 Lichfield Street, Christchurch (“the property”); and
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(b) order that GP96 not relodge a caveat against either of the titles to the property without the leave of the Court.
In appeal CA272/2019, GP96 appeals Gendall J's decision declining:
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(a) to enlarge orders made by Chisholm J in 2011, 2 by restraining the respondent, F M Custodians Ltd (“FMC”), from settling an agreement for sale and purchase dated 11 December 2018 relating to the property and entered into between PVG and the purchaser, Elizabeth Harris (“Mrs Harris”); and
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(b) to restrain FMC from discharging or authorising any discharge of its mortgages over the property, or from assigning or registering any transfer of those mortgages.
As noted, the property was in two titles. It was formerly owned by a company known as Lichfield Ventures Ltd (in liquidation) (“LVL”). LVL was a subsidiary of Property Ventures Ltd (in liquidation) (“PVL”), a company controlled by a developer and entrepreneur, David Henderson. Mr Henderson was LVL's sole director.
In October 2006, FMC advanced $8.7 million to LVL. The borrowing was guaranteed by PVL and Mr Henderson and it was secured by way of a first mortgage over one of the titles to the property. The advance should also have been secured by way of a first mortgage over the other title to the property but, as a result of an error made by the solicitors instructed, this did not occur. A mortgage in favour of FMC was belatedly registered against the second title in November 2009, but as a second mortgage, as is explained in the next paragraph.
LVL also borrowed monies from Dominion Finance Group Limited (“DFG”) at much the same time. This advance was secured by a mortgage over both titles to the property. The mortgage was registered in June 2007. The DFG mortgage was a first mortgage over one title, and a third mortgage over the other title (DFG already had an existing second mortgage over this title).
By October 2009, LVL was in financial difficulties. It had defaulted under its term loan contract with FMC and FMC had obtained judgment against Mr Henderson. By deed dated 8 October 2009, FMC, LVL, a company known as Livingspace Properties Ltd (“Livingspace”), PVL and Mr Henderson agreed to vary the term loan agreement between FMC and LVL. The loan balance was written down to $8.7 million and staged repayments were agreed. Livingspace was a subsidiary of PVL and it was associated with Mr Henderson. It was occupying and running a business from the property. It agreed to guarantee LVL's obligations to FMC and to provide FMC with a first ranking general security agreement over its assets. It also agreed to execute a formal lease of the property from LVL, for a term of six years, with two rights of renewal, each of six years. Mr Henderson agreed to guarantee Livingspace's obligations under the lease. The lease was required to be approved by FMC before execution.
A deed of lease—approved by FMC—was entered into between LVL, Livingspace and Mr Henderson on 5 November 2009. Relevantly, cls 26 and 27 provide as follows:
Total Destruction
26.1 IF the premises or any portion of the building of which the premises may form part shall be destroyed or so damaged
(a) as to render the premises untenantable then the term shall at once terminate, or
…
Partial Destruction
27.1 IF the premises or any portion of the building of which the premises may form part shall be damaged but not so as to render the premises untenantable and:
(a) the Landlord's policy or policies of insurance shall not have been invalidated or payment of the policy moneys refused in consequence of some act or default of the Tenant; and
(b) all the necessary permits and consents shall be obtainable:
THEN the Landlord shall with all reasonable speed expend all the insurance moneys received by the Landlord in respect of such damage towards repairing such damage or reinstating the premises and/or the building but the Landlord shall not be liable to expend any sum of money greater than the amount of the insurance money received.
…
27.4 If any necessary permit or consent shall not be obtainable or the insurance moneys received by the Landlord shall be inadequate for the repair or reinstatement then the term shall at once terminate but without prejudice to the rights of either party against the other.
The lease was not registered against the titles to the property.
There is nothing to suggest that DFG consented to the lease. DFG's loan manager at the time the DFG advances were made to LVL has deposed that he was aware that Livingspace was operating a business from the property. He says that it was his and DFG's expectation that a formal lease would be drawn up. However, by the time the lease was entered into, DFG was in receivership. The receivers have confirmed that there is nothing in their files to suggest that the lease was brought to their attention or that they consented to it. Nor have Livingspace, LVL or their parent company, PVL, produced any records indicating that DFG as mortgagee consented to the lease.
On 5 March 2010, receivers were appointed to PVL and, on 18 June 2010, to some of the assets of Livingspace (but not the lease).
On 23 July 2010, Livingspace purported to assign its interests under the lease to GP96. The deed of assignment was signed by Mr Henderson on behalf of Livingspace, GP96 and LVL. He also signed for himself as guarantor. GP96 was another company associated with Mr Henderson. Its shares are held by a trustee company. The sole director of the company is now Mr Henderson's wife.
Three days after the assignment, receivers were appointed to the remainder of Livingspace's assets, including the lease, and the following day, PVL was placed into liquidation.
There is nothing to suggest that DFG consented to the assignment, and a consultant to FMC has deposed that FMC did not consent.
On 4 September 2010, the property was damaged in the first of the Christchurch earthquakes.
On 29 November 2010, Mr Henderson was adjudicated bankrupt and, on 13 December 2010, Livingspace was placed into liquidation. Its liquidation was followed three days later by the liquidation of LVL.
On 22 December 2010, LVL's initial liquidators gave notice to FMC disclaiming LVL's interest in the property. There is a dispute about this notice. If it was valid, the property passed as bona vacantia to the Crown.
On 22 February 2011, the property suffered further earthquake damage. The property was placed in the “red zone” and access to it was forbidden. GP96 vacated and it has not paid rental under the lease since the February earthquake (or perhaps earlier—there is a dispute as to this).
On 16 April 2011, FMC gave notice to GP96 that it was entering into possession of the property as mortgagee on the basis that the lease had been terminated pursuant to cl 26.1(a), the leased premises having been rendered untenantable. Declaratory orders recording FMC's claim and that it had entered into possession were made by the High Court by consent, without prejudice to the rights of GP96 and FMC and noting that the “lawfulness” of FMC's possession was disputed by GP96. The Court did not declare that the premises were untenantable.
GP96 then applied to the High Court for an injunction to prevent FMC from taking any further steps in connection with the claimed termination of the lease. Chisholm J considered cl 26.1(a) and the affidavits that had been filed by both parties. 3 He considered that GP96 had an arguable case that the building had not been rendered untenantable by the February 2011 earthquake. He made an order preventing FMC from “demolishing, selling or leasing [the property] until the substantive matter [was] heard or until further order of the Court”. The substantive proceedings were then due to be heard on 8 August 2011, but it was adjourned by consent, because, it seems, FMC was then negotiating with the insurers of the property. Neither GP96 nor FMC have taken any steps since to reactivate the proceedings.
As noted above at [5] and [6], there was some difficulty with the registration of FMC's mortgage. It believed it should have received a first mortgage over both titles to the property, and it commenced proceedings against the solicitors it had...
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GP96 Ltd v Pvg Securities Trustee Ltd
...COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA CA258/2019 [2019] NZCA 325 BETWEEN GP96 LIMITED Appellant AND PVG SECURITIES TRUSTEE LIMITED First Respondent F M CUSTODIANS LIMITED Second Respondent CA272/2019 BETWEEN GP96 LIMITED Appellant AND F M CUSTODIANS LIMITED Respondent Hea......