IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE	
CIV-2019-485-367
[2019] NZHC 1790	

UNDER	the land Transfer Act 2017	
IN THE MATTER	of an application under section 105 for the discharge of a mortgage	
BETWEEN	F L JEFFRIES & COMPANY LIMITED
Applicant	

Hearing:	On the papers	
Counsel:	J R Parker for the Applicant	
Judgment:	26 July 2019	

JUDGMENT OF COOKE J

[1]	By applications dated 5 July 2019 the applicant seeks orders:

(a)	directing that the proceeding be commenced by an originating application under r 19.5 of the High Court Rules 2016;

(b)	directing that the application may proceed without notice to any other parties; and

(c)	for orders under s 105 of the Land Transfer Act 2017 that Mortgage No. 206388.3 on Record of Title WN98/107 (Wellington Land Registry) be discharged.

F L JEFFRIES & COMPANY LIMITED [2019] NZHC 1790 [26 July 2019]

[2]	The application is supported by an affidavit from John Renwick Harkness sworn 31 May 2019, an affidavit of Andrew James Stewart sworn 20 June 2019, and a memorandum of counsel.

[3]	I am satisfied that the application can proceed by way of originating application, and without notice to the other parties for the reasons set out in the affidavits and the memorandum of counsel. I note r 18.1(d) of the High Court Rules 2016 contemplates that the application could have been made under that part, but I think this is immaterial.

Facts

[4]	In 1976 Mr Paul Jeffries instructed the firm Scott Hardie Boys Morrison to act for him in relation to the purchase of a property in Thorndon. Mr Jeffries requested that his solicitor, Mr Harkness, act as nominee in purchasing the property. Mr Jeffries already owned a few of the adjoining properties and it was thought best if the offer was made by a different party. The property was duly transferred to Mr Harkness and registered on 7 September 1976, Mr  Harkness holding the property on trust  with  Mr Jeffries as beneficiary.

[5]	Mr Harkness arranged for a mortgage on the property from some of the firm’s clients. This was a time where it was reasonably common for law firms with a substantial conveyancing practice to operate a Solicitors Nominee Company to facilitate the lending and borrowing of money between clients. The mortgage on the Thorndon property secured the sum  of  $16,000.  The  original  mortgagees  were Ms Rickard, for $8,000; Mr Rickard for $7,000; and Mr Ellison and Ms Ellison for
$1,000 as  tenants  in  common.  The  Ellisons  later  transferred  their  interest  to  Ms Pootjes. In 1976 a second ranking mortgage was registered, with a Ms Humm as mortgagee.

[6]	In 1978, pursuant to the trust arrangement, Mr Harkness transferred the legal title to the property to Mr Jeffries. That transfer was registered in May 1978, subject to the two registered mortgages.

[7]	The first ranking mortgage was due for repayment on 20 August 1979. Interest was to be paid at a rate of 11%, due at quarterly instalments during the term. There is no evidence to suggest the terms of the loan secured by the mortgage were varied in any way.

[8]	No record of mortgage repayments has been found. Nor has any record of attempts to obtain or register a discharge of the mortgage. But Mr Harkness is certain the firm received payments of the principle payments, together with interest, on behalf of their mortgagee clients who were in turn repaid. The second ranking mortgage was repaid, and a discharge registered in 1985. But no discharge of mortgage was ever registered in respect of the first mortgage. No action was ever taken to recover any of the monies secured and owing to the original mortgagees. Now, nearly 40 years after the repayment due date, the mortgage is still registered on the certificate of title.

[9]	Mr Harkness offered the following evidence to demonstrate the mortgage must have been repaid:

(a)	Mr Harkness as trustee was personally liable for the principal payments and interest. No action was taken to recover those monies on the part of any of the mortgagees.

(b)	The certificate of title confirms that Scott Hardie Boys Morrison (then named Scott Morrison Dunphy) made a new loan to Mr Jeffries secured by a mortgage. That mortgage was registered on 13 August 1985. It is highly improbable the Solicitor Nominee Company would agree to a further loan if Mr Jeffries had not repaid the earlier mortgage to the firm’s mortgagee clients.

[10]	It appears that, due to some administrative oversight, no one ever registered a discharge of the mortgage. The applicant now seeks an order to discharge the mortgage on the basis the mortgagees’ remedies are barred by the Limitation Act 2010.

Relevant law

[11]	Section 105 of the Land Transfer Act 2017 provides:

105 Court may order mortgage to be discharged if mortgagee’s remedies barred by Limitation Act 2010

(1)	The court may, on application by the registered owner of an estate or interest in land that is subject to a registered mortgage, order that the mortgage is discharged if the court is satisfied that—

(a)	a proceeding by the mortgagee for payment of money secured by the mortgage is barred by the Limitation Act 2010 or any other enactment; and

(b)	except for an application under subpart 1 of Part 4, any other proceeding by the mortgagee for a remedy in respect of the mortgaged land would also be barred by the Limitation Act 2010 or any other enactment.

(2)	The Registrar must register the order discharging the mortgage on lodgement of a sealed copy of the order.

(3)	The mortgage is discharged on registration of the order.

(4)	The court may direct that—

(a)	public notice of an application be given under this section:

(b)	notice of the application be served on any person the court specifies.

[12]	The Limitation Act 2010 applies. Section 11(3)(b) provides it is a defence to any money claim if the defendant can prove the claim is filed at least 15 years after the debt is due. The Act defines a money claim as including a claim to recover a sum of money secured by a mortgage.1 Given that the Limitation Act barring a proceeding for recovery of the debt (if indeed it has not been repaid), the requirements of s 105 of the Land Transfer Act 2017 are met.

Relevant principles

[13]	I am satisfied that the Court may make the orders sought as a matter of principle. In Re a Mortgage, Presland v Death, Cooke J held that the discretion of the Court to make an order discharging a mortgage is unfettered, but in order to succeed an applicant must make out a case in favour of the exercise of the discretion.2 Such orders were made by Venning J in Lee v Khang.3

1	Section 16(1)(c).
2	Re a Mortgage, Presland v Death [1954] NZLR 933
3	Lee v Khang [2013] NZHC 2985.

[14]	I am satisfied on the basis of the evidence that the amounts due under the borrowing supported by the mortgage were repaid. Apart from the circumstantial evidence, Mr Harkness also notes that Mr Jeffries was a member of a distinguished family. One of his brothers was a High Court Judge, and the other a Minister of Justice. In any event if there were any real question on the question whether the monies had been repaid, any disputes would now be statute barred by the limitation period.

[15]	For those reasons I accept the orders should be made.

Orders

[16]	I order that mortgage 206388.3 on record of title WN98/107 (Wellington Land Registry) be discharged under s 105 of the Land Transfer Act.   No orders under       s 105(4) are necessary.

Cooke J

Solicitors:
WCM Legal, Wellington