Australian and New Zealand Banking Group v Ponga [2007] CKHC 23; Misc94.2007 (13 November 2007)

IN THE HIGH COURT OF THE COOK ISLANDS
HELD AT RAROTONGA
(CIVIL DIVISION)
MISC NO. 94/2007

BETWEEN THE AUSTRALIAN AND NEW ZEALAND BANKING GROUP
Applicant

AND

MOEARO PONGA
First Respondent

AND

ELIZABETH PONGA
Second Respondent

AND

PONGA ENTERPRISES LIMITED
Third Respondent

Hearing: 13 November 2007

<: C Little for Applicant
T Arnold for Respondents

Judgment: 13 November 2007

ter">JUDGMENT OF NICHOLSON J

me="bme="bkBodyStart">Solicitors:
C Little, Little & Matysik PC, Maraerenga, Avarua, Rarotonga ([e-mail] )
T Arnold PC, Ruatonga, Rarotonga ([e-mail] )

[1] This is a decision in the proceeding between the applicant, Australian and New Zealand Bank Group Limited ("the Bank"), the first and second respondents, Moara Ponga and Elizabeth Ponga ("Mr and Mrs Ponga") and the respondentndent, Ponga Enterprises Limited.

[2] The Bank has applied for an injunctive Order against the respondents and/or their agents, servants, contractors, tenants or lessees rening the same from interfererfering with the Bank and/or its agents, servants or assignee's occupation of a piece of land leased to Mr and Mrs Ponga on which ths a store tore and a building, which is in two units.

[3] The Bank is a mortgagee in possession pursuant to the exercise of powers under a mortgage granted by Mr and Mrs Ponga in a rt of a loan by n by the Bank to Mr and Mrs Ponga's business, Ponterprierprises Limited, for which Mr and Mrs Ponga offered the lold inte interest as mge security, and also became personal guarantors for the rehe repayment of that loan. The loan was made in early 2005 for a very substantiount of Aus$367,000.00. It was to provide working capital ftal for Mr and Mrs Ponga's business a refinancinance a debt which the business owed to Westpac Bank.

[4] Unfortunately the usual obligations under the mortgage has been poor with the amou debt increasing, and steps by the Bank to reach an acceptaceptable and reasonable way of dealing with the situation have continually received frustration. Mr W the Bank officer currentlrently handling the claim, says that the history of the account with the Bank has been a lot of empty promises.

[5] The Bank, therefore, seeks to recover as much of the debt as is owed to it by enforcing the mortgage by way of mortgagee sale. A Section 92 Notice has been served and payment has not been made. On 18 May 2007 Hingston J granted an ete applicatiocation pursuant to s 646 of the Cook Islands 1915 angBank to enforce thee the mortgage.

[6] The recent histohistory is that the shop on the premises has been occupied by Manea Foods, who have had nationpurchase the store on the property from Mr and Mrnd Mrs Pons Ponga. Manea Foods wants occupation by rental of a residential building on the property which has become crucial for it carrying out business there. The agreed price for the store was $330,000. However, within a short while of such agreement having been made Mr and Mrs Ponga advised that the cottage building was not available for rent and accordingly Manea Foods' proposed purchase was vacated.

[7] As with mortgagees who have implemented a mortgagee sale, the Bank had hoped for interest from persons other than Mr Beer of Manea Foods there here has not been such interest. The Bank has negotiated an arrangement with Mr Beer to pse the property unty under a mortgagee sale for $450,000.00is intended that if such sale is confirmed then there will will be negotiations for purchase of the plant and equipment, the Bank hav debenture security over ther that equipment.

[8] Mr Bf Manea Foods has been in n in occupation and paying rent. He has been paying it to Mr and Mrs Ponga on the basis that they preferred it not to be paid into a bank account but, rather, paid dito them when they called foed for it. The last call for the rent was in early August this year went payable up t up to 1 July wad. So far as the rene rent is concerned Mr Beer says he is willi pay, pay, and if the Court directs that the rent be po the then he will pay it to the Bank. The Bank as mors mortgagee in possession says that it is t is entitled to such rent.

[9] ifficulty with the mortgagetgagee sale to Mr Beer's firm is thatPonga faga family still occupies the residence and such a sale cannot proceed in that situation. Full vacancy being required.

[10] Today Mr Arnold, inoper and valiant iant attem behalf of the respondents ents to at least claim further time, but if possible a more far reaching consequence, submitted that the von orders sought not be made, in an exercise of the Court'surt's discretion, because the Order granting leave to enforce the mortgage made on 8 May 2007 wae on n ex parte base basis. He challenged the legality of that Order.

[11] I am of the view that it was legal and appropriate for such an application to be dealt with ex parte pursuant to the provisions of Rule 68(8) ofJudicature Act on t on the basis as stated in sub-rule (b) that such an application is in respect of a matter of routine. The moe the subject of such an application will have received the consent of the Lease Approval Tval Tribunal. When an application for leave to enforce is made affidavit evidence is supplied in support to satisfy the Judge that what is happening is indeed routine. This is generally provided by way of a copy of the mortgage being produced, and a statement of debt currently owed. So I consider that the application was validly made and granted.

[12] Mr Arnold's second positiobeha behalf of his client - and he said that this was a crucial element - was the prospect that an expression of interest by Mr Trevor Clarke in acquiring roperty should be given time to be explored. Mr Clarkelarke is overse the mthe moment but will be back in Rarotonga within a matf days. It is in everybody's interest, including the Bank's interest, that the property be y be sold to the best advantage and if indr Clarke or his busineusiness interests are prepared to pay more than Mr Beer of Manea Foods theryboerybody will be grateful for that. However, there is a degree of scepticism on the part of the Bank in light of past alternatives which have not come to fru.

[13] So, in all the circumstances I consider iter it is an appropriate case to make the Orders sought. Finality must be brought to an end on this matter. The debt is eating itself off in interest and there must come the day when a substantial part of it is repaid and it should be sooner rather than later in Mr and Mrs Ponga's interests as as thes the Bank's interests.

[14] So what I do is I grant the application and make the Orders as applied for, but add the term that the Orders for poion are not to be enforced for seven (7) clear days after tter today – that is, before 21 November 2007. If in that time M0;Cl60;Clarke comes up with some attractive prospects then undoubtedly the Bank will delay enforcement until such time as iher cto successful conclusion or else it is completed. So that gives the breathing timg time soue sought.

[15] In light of the evidence today, bearing in mind the amount of rent payable on the property has been accounted for by the mortgagors to the Bank since Manea Foods has been occupying the store, I am of the view that it is fair and appropriate to direct that the arrears of rent and continuing rent payable by the occupant of the store be paid forthwith to the Bank. That will have the effect of reducing the amount of debt to a certain extent and the amount of interest.

[16] That leaves the question of costs. Costs are reserved.

Nicholson J

Editoriatorial Note: Derived from the Court’s electronic records and believed to be correct and final.