Attempts
by BNZ to force a sale of four multi-million dollar properties in the Auckland
seaside suburb of St Heliers subject to a protracted legal battle between
estranged husband and wife were blocked by the Court of Appeal. BNZ failed to issue correctly worded default
notices.
Gregory Olliver and Sarah Sparks
separated in July 2012. Prior to that
they were jointly involved in a proposed property development spanning nine residential
sites in St Heliers covering some 10,000 square metres. A family trust set up
by Ms Sparks has a 60% interest in the joint venture; Mr Olliver’s family trust
40%.
The court was told Bank of New Zealand
lent $6.75 million in 2009 to purchase five of the properties: the Tranche One
properties. BNZ took security over “all
present and after-acquired property” of CIT Holdings, the joint venture vehicle
used. CIT later took ownership of four
further properties: the Tranche Two properties.
Tranche Two was intended to survive the joint venture, mortgage free, as
a residence. The proposed joint venture
was not successful. The two former
spouses were at each other’s throats.
The debt due to the BNZ was escalating, reaching $10.1 million and
rising by 2014.
The CIT loan became a major headache for
BNZ. It took a series of court hearings
to prise the Tranche One properties out of Ms Sparks control. Interests associated with Mr Olliver made
offers to buy all nine properties at a price which Ms Sparks alleges
undervalues them. In a flurry of legal
activity Ms Sparks had caveats lodged against all the Tranche One and Tranche
Two properties to protect her interest in the joint venture and she filed a
relationship property claim. BNZ filed
its own caveat against the Tranche Two properties; these properties were
acquired after the 2009 loan.
The court was told all parties had agreed
to a sale of Tranche One properties. Ms
Sparks dug in her heels over selling Tranche Two. She alleges BNZ and her former husband might
collude to gain control of the Tranche Two properties at her expense. In particular, she complains much of the BNZ
debt might be booked against Tranche Two sales when BNZ did not lend against
the Tranche Two properties.
The Court of Appeal said BNZ’s security
over CIT’s “after-acquired” property gave the Bank an equitable interest over
the Tranche Two properties. BNZ’s
Property Law Act default notice warning of a forced sale of the Tranche Two
properties made reference to security taken under the Personal Property
Securities Act. This Act applies to
security taken over goods, not equitable mortgages over land. BNZ needs to issue an amended Property Law
Act notice to force a sale of Tranche Two land, the Court ruled.
Glover
No.2 Ltd v. BNZ – Court of Appeal (6.05.16)
16.076