ANZ National Bank Limited v Ting

[2012] NZHC 2860

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-007769 [2012] NZHC 2860

BETWEEN  ANZ NATIONAL BANK LIMITED Plaintiff

ANDTAI TING Defendant

Hearing:         3 October 2012 (Heard at Auckland)

Appearances: S-J Telford for Plaintiff

C J Orton for Defendant

Judgment:      31 October 2012

JUDGMENT OF ASSOCIATE JUDGE OSBORNE [as to summary judgment application]

Introduction

[1]      A bank lends money to a property investor resident in China.   It does so twice.   It lends $175,200 and $160,800.  Soon afterwards the investor arranges an overdraft facility with the bank and proceeds to draw down on that facility.   The investor (through an attorney) buys properties in Auckland and secures repayment of the loans with mortgages.  He becomes unable to keep up loan payments.  The bank exercises its power of sale over the two properties. After crediting of the proceeds of sale, there is still $223,951.01 owing overall on the loans.   The bank demands

payment. The investor does not pay. The bank issues this proceeding.

ANZ NATIONAL BANK LIMITED V TING HC AK CIV-2011-404-007769 [31 October 2012]

[2]      Dates in the sequence of events were:

20 May 2011 – issue of Property Law Act 2007 notice

August/September 2011 – sale of the two properties

17 October 2011 – bank’s demand before proceeding

1 December 2011 – proceeding issued

[3]      The  bank’s  legal  executive,  in  an  affidavit  in  support  of  the  summary judgment application, deposes that the defendant has not provided any reason to the bank that would give him a defence to the bank’s claim.  There is no challenge to that evidence in the evidence for the defendant.  The defendant does not suggest that he raised any issue with the bank either immediately following his defaults in mid-

2010 or following the 20 May 2011 Property Law Act notice down to when his notice of opposition was filed (after substituted service) in June 2012.

[4]      Rhonda Graham, a partner of the bank’s solicitor’s law firm, deposes that on

19 August 2011 she had a telephone call from a male who said he was an interpreter and a friend of one Mr Lin who had placed a caveat over the two property titles.  In the course of the conversation, the caller was clearly seeking to avert the bank’s pending (the next week) mortgagee auction.  After discussions about the caveat, the caller asserted that the situation was:

... the Bank’s fault because Mr Ting had had finance to build and when the

“GFC” happened, his finance was withdrawn.

[5]      Ms Graham indicated to the caller that she did not understand what he meant and asked if he was talking about the National Bank, to which the caller replied:

Maybe, maybe Westpac.

[6]      Ms  Graham  repeatedly  in  the  conversation  asserted  the  bank’s  right  to

proceed and advised the caller to get legal advice.  She did not hear from the caller

again.  Neither Mr Ting nor his attorney subsequently contacted the bank about the subject matter of the telephone call.  As I have said, Mr Ting’s first raising of issues came when he filed his notice of opposition in this proceeding (some ten months later).

No dispute as to the debt calculations

[7]      The defendant does not take any issue as to the existence of the pleaded loan contracts or the calculation of the balance by reference to payments received or credited.

[8]      This Court instead has to consider a single affirmative defence.

Plaintiff ’s summary judgment application – the principles

[9]      The starting point for a plaintiff’s summary judgment application is r 12.2(1) High  Court  Rules,  which  requires  that  the  plaintiff  satisfy  the  Court  that  the defendant has no defence to any cause of action in the statement of claim or to a particular part of any cause of action.

[10]     I  summarise  the  general  principles  which  I  adopt  in  relation  to  this application:

(a)       Commonsense, flexibility and a sense of justice are required (Haines v

Carter [2001] 2 NZLR 167 (CA) at 187).

(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence.  The Court must be left without any real doubt or uncertainty on the matter.

(c)      The  Court  will  not  hesitate  to  decide  questions  of  law  where appropriate.

(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements and affidavits.

(e)      In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts.   It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other   statements,   or   inherently   improbable   (Eng   Mee  Yong   v

Letchumanan,1   adopted  in  Attorney-General  v  Rakiura  Holdings

Ltd.2)

(f)      In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation.

[11]     Appropriate means of assessing defences were identified early in a number of cases.  In Pemberton v Chappell3  Somers J said that in the context of the summary judgment rules:

... the words “no defence” have reference to the absence of any real question to be tried.   That notion has been expressed in a variety of ways, as for example, no bona fide defence, no reasonable ground of defence, no fairly arguable defence.

What the defendant once said but no longer says

[12]     The defendant originally raised in opposition a number of alleged defences. Mr Orton, who was briefed only shortly before the hearing, understandably had the defendant abandon all the initially pleaded defences.  I therefore mention them only

briefly to put into context that part of my judgment which follows.

1      Eng Mee Yong v Letchumanan [1980] AC 331 (PC) per Lord Diplock at 341.

2      Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 (HC) per Greig J at 14.

3      Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.

Breach of duty of mortgagee exercising power of sale

[13]     The defendant referred to the bank’s mortgagee sales.   The defendant said that the bank should have sold the properties for $200,000 to Mr Lin (the caveator mentioned above at [4]).

[14]     This proposition stood up to not the least scrutiny.

[15]     The  bank  achieved,  through  the  sale  of  the  properties,  a  net  return  of

$213,836.88.

[16]     Furthermore, the evidence and subsequent Court proceedings concerning the involvement of Mr Lin (who is the caveator to whom I have earlier referred) establishes attempts by a defaulting mortgagor to stymie a sale at market value.  Mr Ting in February 2011, was apparently content to enter into contract for the sale of the properties with Mr Lin.   Mr Ting “sold” the properties each for $100,000 and recorded receipt of a deposit of $20,000 which Mr Lin could convert to a pre- payment of five years’ rent “as a camping ground” if the purchase was not completed on the settlement date.

[17]     In his initial notice of opposition Mr Ting asked a series of questions as to matters relating to the auction and the marketing.  In an affidavit in opposition, the defendant’s attorney, Ting Hsiu Yun, referred to comments from one Augustine Lau as  to  sale  matters  concerning  the  properties.    The  defendant  has  not  adduced evidence from Augustine Lau.   But there is ample in the evidence adduced as a whole in this proceeding to indicate that the hand of Augustine E K Lau was heavily upon many of the activities and positions taken by the defendant and his attorney. Perversely, handwritten signs were placed on the site of the two properties referring to building covenants and inviting parties to telephone a phone number (which was the phone number of Augustine Lau).  The evidence of attempts to stymie the bank’s sales process is overwhelming.

[18]     As a matter of record, Augustine Lau has featured in a similar role in other proceedings.  For instance:

(a)      In Lin v ANZ National Bank Ltd,4 the same Mr Lin as I have referred to at [13] and [16] above had caveated titles of two other vacant sections owned by the same Mr Ting as is the defendant in this case. Mr Ting was also seriously in default of mortgage obligations to the bank in that case.  Mr Ting had entered into an agreement to sell the properties  to  Mr  Lin,  with  rights  of  tenancy  if  the  sales  did  not proceed.  Associate Judge Sargisson found that the bank’s mortgage trumped the subsequent agreements, and made orders dealing with removal of the caveats.

(b)In  Westpac  New  Zealand  Ltd  v  Set  Kien  Law,5   Augustine  Lau appeared in a caveat lapsing case, pursuant to a power of attorney for the respondent caveator, Jianjun Lin (the same Mr Lin whom I have referred to at [13] and [16] above).  Associate Judge Christiansen at [17] of the judgment records that Mr Lau had assisted Chinese nationals to structure deals which provided for a five year tenancy if

sale and purchase did not proceed.  His Honour concluded that:6

... there appears to be a careful design by interests connected to Mr Lau to obtain control of a property for an extended period by a process intended to frustrate the right of a mortgagee bank to access its security to effect repayment of its loans.

Orders were made as to the removal of the caveats.

(c)      In Westpac New Zealand Ltd v Set Kien Law,7  the Court was again dealing with caveats. Associate Judge Bell noted:8

... it is apparent that there is a person who has been responsible for the lodging and maintaining of the caveats. That person is Mr Augustine Lau.

Yet again the interest claimed in each caveat was “as purchaser and

lessee pursuant to an agreement ... between the registered proprietor

4      Lin v ANZ National Bank Ltd CIV 2011-404-005395 HC Auckland, 22 September 2011.

5      Westpac New Zealand Ltd v Set Kien Law [2012] NZHC 890.

6 Ibid, at [68].

7      Westpac New Zealand Ltd v Set Kien Law [2012] NZHC 1065.

and the caveator”.9

Associate Judge Bell held that the caveat could not be sustained.  In doing so he found that:10

There is a clear pattern of conduct of Mr Lau actively taking steps to lodge caveats which have the effect of impeding and delaying mortgagees enforcing their powers under their mortgages.  That pattern of conduct has been repeated in this case.

[19]     The defendant in this case was right to abandon, through Mr Orton, the ground of opposition asserting breach by the bank of its duty on a mortgagee sale. On the evidence, the bank’s efforts on sale achieved a very good result (with a gross recovery of $270,000 for the two properties compared with the $200,000 for which Mr Ting “sold” the same properties to Mr Lin).  On the evidence the single factor which most threatened to derail and prejudice the achievement of a good sale price was the contractual arrangement entered into by Ms Ting (who holds power of attorney for the defendant) and Augustine Lau, and the steps which Augustine Lau then took to interfere with that sale.

[20]     The purported sales to Mr Lin did not alter the bank’s rights.  The bank had the right to sell and it has produced uncontradicted evidence of a careful and successful sale process.  The defendant adduced no admissible evidence to challenge the bank’s evidence.

Breach of s 9 Fair Trading Act 1986

[21]     The defendant’s complaint under s 9 Fair Trading Act 1986 related to a change in the bank’s policy in relation to loan ratios.   The ratio changed between mid-2008 (when the defendant obtained the two loans), and March 2009 (when Ms Ting sought finance for construction).  Ms Ting’s evidence queried “why no notice to

my brother?”

9 Ibid, at [11].

[22]     A complaint under the Fair Trading Act was unsustainable and appropriately abandoned.  The bank’s evidence disclosed the obvious, namely that while a bank might maintain a particular policy on ratios for a period, such policies are subject to review as circumstances require.  The impact of an event such as the global financial crisis is such a circumstance.

Mistake

[23]     The defendant’s invocation of s 6 Contractual Mistakes Act 1977 was also based on a belief as to the bank’s lending ratios.  But, if a mistake was made it was as to a future event.  Such does not constitute a “mistake” for the Act’s purposes. This  was  one of  a number of flaws  in  the mistake argument.   This  ground of opposition was also appropriately abandoned.

Dishonest assistance in a breach of trust

[24]     The  defendant  identified  as  a  further  ground  of  opposition  dishonest assistance in a breach  of trust.   Nothing was  given in evidence to indicate the existence of a relevant trust, let alone who the trustee might be (whom the bank might then have assisted).

[25]     This ground of opposition was also appropriately abandoned.

Possibility of a counterclaim

[26]     The defendant identified as a separate ground of opposition “Counterclaim”. There was a separate heading “Reverse possibilities” which appeared to amount to the same proposition.  The defendant asserted that he was entitled to damages from the bank.   Such is not a distinct ground of opposition.   The existence of a (counterclaim) damages calculation has significance only if it relates to a breach of some duty of the plaintiff.  Mr Orton did not address me on the question of damages. His focus, as I will come to, was on equitable estoppel.  Given that estoppel may be a  sword  rather  than  a  shield  (see  Burbery  Mortgage  Finance  & Savings  Ltd  v Hindsbank Holdings Ltd [1989] 1 NZLR 356 (CA)), an estoppel may give rise to a

compensation claim.   But to reach a point of argument the defendant would first have to have an arguable estoppel claim.  I return to that issue below.

Contractual Remedies Act 1979

[27]     At the start of the hearing, Mr Orton sought leave to introduce a substituted Notice of Opposition which omitted all the grounds of opposition the defendant had asserted. The amended notice instead asserted that the defendant had a valid defence “in equitable estoppel and pursuant to s 6 Contractual Remedies Act 1979”.

[28]     Given that the hearing had commenced, I directed that counsel proceed but reserving the position of the bank.  Ms Telford opposed the defendant’s reliance on new grounds and on a supplementary affidavit of Ms Ting produced the day before the  hearing.    If,  in  considering  my  judgment,  I  was  to  form  a  view  that  the defendant’s amended grounds might be tenable, I would protect the bank’s position by  offering  the  bank  the  opportunity  to  provide  evidence  in  reply  to  the  new evidence and supplementary submissions of Ms Telford’s submissions on the day of the hearing incomplete because of the late raising of defences.   For the reasons which follow, it is unnecessary to trouble Ms Telford in that regard.

[29]     As it was, before Mr Orton spoke to the detail of the amended notice of opposition, he withdrew the reliance on the Contractual Remedies Act.  Section 6 of the Act would be relevant only if a contract had been cancelled.   No contract has been cancelled in this case.

[30]     Instead  of  placing  reliance  on  the  Contractual  Remedies Act,  Mr  Orton sought leave to further amend his (amended) notice of opposition to place reliance on the remedy of equitable compensation or damages (flowing from an equitable estoppel).

Need for discovery

[31]   In the original notice of opposition, now abandoned, the defendant had suggested that there was a need for a degree of discovery if the defendant’s case was

to be fairly presented.  The documents said to be important were communications between the bank and its agents on the mortgagee sales.  The Court would not have denied the bank summary judgment on this ground.   The defendant had failed to provide any tenable foundation  for  a  suggestion  that  there had  been  something lacking in the sale process.

Equitable estoppel

Defendant’s opposition grounds

[32]     Ultimately the defendant rested his case on the doctrine of equitable estoppel. The estoppel was said to have arisen from a promise. The promise was this:

... the Plaintiff by its employee, Ms Wong, represented to the Defendant that the Plaintiff would loan (sic) further monies to the Defendant to build homes on the properties.

[33]     Ms Ting’s supplementary affidavit (unlike her first) says the loan would be at

80 per cent LVR.  LVR is a banking acronym for “Loan to Value Ratio”, representing

the amount of the loan as a percentage of the value of the (secured) property.

[34]     It is said that the defendant relied on the promise when agreeing to borrow money from the plaintiff.  It is said that the promise was not honoured because the bank declined or refused to lend money to the defendant to build homes on the properties.

Estoppel – the principles

[35]     Mr  Orton  adopted  as  a  correct  formulation  of  the  elements  of  equitable estoppel the following passage from Butler’s Equity and Trusts in New Zealand:11

Although the modern approach is “to depart from strict criteria and to direct attention to overall unconscionable behaviour” it is nevertheless clear that the party alleging an estoppel must show that:

11     James Every-Palmer “Equitable Estoppel” in Andrew Butler (ed) Equity and Trusts in New

Zealand (2nd ed, Thomson Reuters, Wellington, 2009) 601 at 613-614.

(a)       A belief or expectation has been created or encouraged through some action, representation, or omission to act by the party against whom the estoppel is alleged;

(b)       The belief or expectation has been reasonably relied on by the party alleging the estoppel;

(c)       Detriment will be suffered if the belief or expectation is departed from; and

(d)       It would be unconscionable for the party against whom the estoppel is alleged to depart from the belief or expectation.

(Footnotes omitted)

[36]     The  Butler  text,  in  relation  to  the  element  of  reliance  on  a  belief  or expectation held, adds this:12

The reliance on that belief or expectation must have been reasonable

The representee’s decision to rely on the belief or expectation must also have been reasonable.  Reasonable reliance is to be assessed objectively, and will depend on the circumstances of the case as well as the nature of the belief or expectation.  For example, in commercial transactions reliance on “informal communications of an ambiguous kind” is unlikely to be considered reasonable or to override contractual rights.   The reasonableness of the representee’s reliance is discussed in more detail in 19.3-19.5 (which deal with estoppel by representation, convention, and silence respectively).

(Footnotes omitted)

[37]     The judgment of Deane J in Commonwealth of Australia v Verwayen13  is an oft-cited statement of the requirement of the reasonableness of reliance.14

[38]     An examination of the facts relied on by the defendant demonstrates that the defendant cannot point, even arguably, to facts which would satisfy all the elements

of equitable estoppel.

12     Ibid, at 615.

13     Commonwealth of Australia v Verwayen (1990) 170 CLR 406 (HCA) at 445.

14     National Westminster Finance New Zealand Ltd v National Bank of New Zealand Ltd CA No

159/92, 30 March 1993 at p 26-27 noted (but not on this point) at [1996] 1 NZLR 548.

Reasonable reliance?

[39]     The  defendant  has  not  given  evidence  in  this  proceeding.    There  is  no evidence as to his belief or as to any documentary communication between Ms Ting and himself.  His case is put entirely on the evidence of his sister/attorney.  I accept, at least for summary judgment purposes, that if it is demonstrated that she, as his attorney (arguably) reasonably relied on a bank promise, then that is equally (arguably) the defendant’s reliance.

[40]     However,  nothing  in  the  evidence  points  to  reasonable  reliance.    The evidence points entirely to unreasonable reliance.

[41]     Ms Ting dealt with the bank through brokers. She did so in two distinct ways. She obtained the two loans (and overdraft) to which this litigation relates through a broker, Annie Lo, who had dealings with the Takapuna branch of the bank, with the two loans then becoming administered by the Glenfield branch of the bank.   She later used another broker, Dustin Wang, who dealt with the Pakuranga branch.  She obtained two further loans, which are not the subject of the litigation.  A Pakuranga branch manager, Yu Ching Wong, processed and signed those later loan agreements for the bank.   The involvement of brokers makes entire sense.   It makes sense commercially.   But it also makes sense for language reasons.   Ms Ting has some ability with the English language, but she is far from fluent.   Her first affidavit, which she filed herself, displays some limitations.   Two early paragraphs on an important issue in her affidavit illustrate the level of written fluency:

3.Sometime in mid 2008, my brother applied the loan from Plaintiff and applied second loan for the preconstruction preparation cost end of 2008.

4.The officer, Ms Wong in Glenfield branch of Plaintiff advised me the second  loan  of  construction  will  be  available  anytime  after  my brother ready to draw after the building consent ready.

[42]     I have not heard her as a witness, but she has appeared in early hearings in this proceeding.  It is a matter of record that her spoken English is such that she has previously been advised by the Court that she would have to arrange a Chinese/English interpreter if she was to have a speaking role in the litigation.

[43]     I add for completeness that I have not overlooked the quality of English in Ms Ting’s supplementary affidavit, filed the day before the hearing.  It is written in fluent English, without any of the hallmarks of the first affidavit.  I have no doubt that it has the quality it has because of the legal assistance she had in its preparation.

[44]     So the Court is left with a witness who says that she relied on something said to her by a bank officer.  But it is plain that where discussion in the English language with Ms Ting involved statements of commitment or statements of what might be possible, and where it involved statements of current bank internal policy or statements  as  to  banking commitments  to  the  customer,  the correct  meaning of exactly what was being said was very readily open to misunderstanding by Ms Ting. That is in no sense a criticism of the bank involved.  A banking officer will answer the questions asked. But such conversations on the part of Ms Ting cannot constitute a reasonably reliable basis for a later argument that the bank made a particular commitment “to loan further monies”.

[45]     This conclusion is inevitable for reasons of the language difficulties alone.

[46]     The  same  conclusion  is  reinforced  when  one  considers  the  commercial context.   The bank  was  lending over $330,000  to a first-time customer for the purchase of bare land.  Ms Ting does not depose that the value of the intended house project was discussed with the bank.  There is no suggestion in her evidence that the timing of any construction was discussed with the bank.  The bank’s written records of the application disclose no such discussions.  A record would have been expected if such discussions occurred.  Ms Ting has produced no documentary record of any discussions, whether in personal notes or in communications with her brother, for whom she was completing substantial financial transactions.  Such a record would seem both commercially wise and necessary given what Ms Ting was committing her brother to.   In the circumstances of this case, the absence of any written reassurance amounts to an unreasonable reliance on allegedly oral commitments.

Uncertain nature of the promise

[47]     It  is  for  a  defendant  who  asserts  an  affirmative  defence  to  a  summary judgment application to lay a credible foundation for his or her allegations.  It is this consideration which in some cases leads the Court, upon critical examination of the evidence,  to  reject  the  evidence  of  those  who  come  forward  with  equivocal, imprecise, inconsistent or inherently improbable evidence.    The undisputed contemporary documents may in such cases provide a reliable benchmark for the Court’s assessment of the evidence.

[48]     Ms Ting, in her first affidavit, was clear in her assertion that the officer of the bank who made the promise to her was “Ms Wong in Glenfield branch”.   In her affidavit she puts the timing of that discussion as “some time in mid-2008”, which accords with the date when the loans which are the subject of this litigation were applied for and made.

[49]     The allegation that Ms Wong of the Glenfield branch was involved with the June 2008 loans is, on the full evidence now before the Court, plainly wrong.  Ms Ting’s affidavit led the bank to file promptly a reply affidavit which dealt in part with the allegation in relation to Ms Wong.   Victoria Kernohan, a legal executive employed by the bank, identified Ms Yu Ching Wong as a personal manager at the bank’s Pakuranga branch  who was involved as the authorised signatory in the two

later loans which Ms Ting obtained for Mr Ting.15   Ms Yu Ching Wong also provided

reply evidence.  She confirmed that she was based at the bank’s Pakuranga branch

from March 2003 for approximately one year and then again from mid-2007 to mid-

2009.  She deposes that she has never worked at the Glenfield branch.  On the basis of her computer records, she identifies her first contact with Ms Ting (and Mr Ting) as being in September 2008 at the Pakuranga branch.  Applications Mr Ting made that month for borrowings for investment purposes were withdrawn.   But in December 2008, Ms Wong was again involved when Mr Ting (through Ms Ting)

entered into the two additional loan agreements which are not the subject of this

15 Above [41].

proceeding.   Ms Wong confirms that she executed those as representative of the bank.

[50]     Ms  Kernohan,  in  her  evidence,  identifies  the  relevant  bank  officer  who executed the June 2008 loan contracts on behalf of the bank as Timothy Doughty of the bank’s Glenfield branch.  The loan documents produced in evidence confirm that involvement on the part of Mr Doughty.

[51]     Ms Ting took the opportunity to file a further affidavit on the eve of the hearing.  It is significant both for what it says and what it does not say in relation to the alleged promise.

[52]     Ms Ting refers to the paragraph in her previous affidavit in which she made the allegation as to what Ms Wong had told her in the bank’s Glenfield branch.  She then deposes:

The reference to Glenfield is wrong.  At the relevant time, Ms Wong was working at the Pakuranga branch of the bank.

In paragraph 4, I do not state how many times I met with Ms Wong.  My brother entered into two loans to purchase the sections at 90 and 106 Kiri Vista Rise.   He entered into these loans on or about 4 and 11 June 2012 respectively (“the two loans”).

Before he entered into the two loans, I met with Ms Wong physically at [sic] bank on a number of occasions.  As it was some time ago, I cannot recall specifically how many times I met with Ms Wong.  However, I would have met with her at least 5 times.

[53]     In other words, Ms Ting has resiled from the allegation that she met Ms Wong in the Glenfield branch.  But she persists in her allegation that it was Ms Wong who dealt with her in relation to the June loans.  To do this she places Ms Wong, as the evidence clearly indicates Ms Wong would have been, in the Pakuranga branch.

[54]     The fundamental difficulty with this altered evidence is that there is nothing beside Ms Ting’s affidavit evidence to connect the June loans with the Pakuranga branch or with Ms Wong. The documentary evidence is that the relevant connections by the borrower for the June loans were with the Glenfield branch, with no connection to the Pakuranga branch.  The loan documents themselves were drawn up

in the name of the Glenfield branch and executed by a Glenfield bank officer. This is in  contrast  to  the  December  loans  which  were  drawn  up  in  the  name  of  the Pakuranga branch and executed for the bank by Ms Wong.

[55]     Ms Wong’s  uncontradicted evidence is that she has never worked  at  the Glenfield branch.  Ms Ting, although she now accepts that Ms Wong worked at the Pakuranga branch and not the Glenfield branch, has produced no documentary or other independent evidence to give any basis for the suggestion that Ms Wong might have been dealing with a Glenfield branch matter.  Ms Ting refers to having used a broker, Annie Lo, in relation to the June loans but produces no evidence from Ms Lo of what would be an unusual dealing with Ms Wong at the Pakuranga branch in relation to Glenfield branch loans.

[56]     There is no credible basis on which to go behind Ms Wong’s evidence as to her contact with Ms Ting and Mr Ting beginning in September 2008 through the Glenfield branch.

[57]     When the evidence is entirely against Ms Wong’s making of a promise to Ms Ting in relation to the June loans, the very foundation of Mr Ting’s defence falls away.

The period covered by the promise

[58]     The promise as  asserted  by Ms Ting (above  at  [32]) did  not  describe a particular period of time after which the promise would expire.

[59]     The promise, as stated by Ms Ting, was that the construction loan would be available “anytime after my brother ready to draw after the building consent ready”. If the Court were to find that there was an otherwise effective promise, the Court nevertheless would not in equity require a bank to keep open such a promise for an indefinite period.   To meet this point, Mr Orton submitted that the Court would imply an understanding that the offer of the construction loan finance would remain open for a year, upon the basis that a year would be a reasonable period of time

having regard to the needs for building plans, building consents and construction arrangements.

[60]     Assuming (contrary to my earlier finding), that a promise of the kind alleged by Ms Ting had been made, I would not have found that there was a promise of a kind which unequivocally committed the bank to holding the promise open for a particular period, whether as long as one year or otherwise.  If the Court puts itself in the position of the parties, it would have been obvious that any number of events could ensue which would cut across any expectation of performance by the bank. The bankruptcy or insolvency of Mr Ting, or closely associated entities, would be such an event.  A dramatic economic reversal – such as the global financial crisis – which demanded a different approach to lending ratios or indeed lending at all would be another such event.  These examples emphasise that the parties could not have reasonably understood there to be an unequivocal promise with implied terms of the nature asserted by Mr Orton.  In the circumstances, there is equally no basis upon which this Court should conclude that any promise made by the bank was to be understood by Mr Ting or Ms Ting as applying in the event the bank’s lending policies changed.  Any such promise could not reasonably have been understood by Mr Ting or Ms Ting to carry the meaning for which they contend.

The nature of loan applications

[61]     There  is  a  further  consideration  as  to  the  reasonableness  of  Ms  Ting’s

understanding that a promise of a loan had been made.

[62]     The  applications  for  the  loans  to  buy  the  two  parcels  of  bare  land  had required lengthy application forms supported by up-to-date details of income and outgoings, assets and liabilities.   When the further loan application (subsequently withdrawn) was pursued by Ms Ting in September 2008 the same detailed, updated forms were required.  The same process occurred, yet again, when Ms Ting made her successful application for the two further loan applications which were made to the Pakuranga branch and resulted in the December 2008 loans.

[63]     It is against this background that Ms Ting asserts that a promise was made by the bank to lend her brother at some time in the future sufficient funds for the construction of residences on the two  properties bought in June 2008.    Such a promise is alleged to have been made without any form of application being made for those loans in particular.

[64]     To rely on any indication given as to future lending for construction in such circumstances is objectively unreasonable, even without evidence as to the bank’s lending policies.  But in this case, in response to the affirmative defences raised, the bank gave reply evidence which identifies straightforward and understandable policies in this area.   Ms Wong deposes that where a customer has a query about borrowing further funds, which is referred to as a “top-up” loan, an application form is set up.  This is done as a matter of course even though the customer may not be serious about proceeding with the application, particularly in a situation where the top-up loan is for construction.  The application is withdrawn if it does not proceed. Ms Wong deposes that no such application for a construction loan was lodged into the bank’s system.

[65]       Ms Wong further deposes that unless a customer applies for top-up pre- approval which the bank has available for up to three months, no assurance is ever given to a customer that lending would definitely be available at a future date.  Ms Wong explains that the bank’s lending criteria frequently change as do customers’ personal situations.

[66]     Finally, Ms Wong deposes that as a personal banker, her lending approval limit was to a total borrowing of $500,000, so that in this case approval would have been required from a credit manager as well as herself.

[67]     Nothing in the evidence given by Ms Wong has been contradicted by Ms Ting.   Ms Wong’s evidence of banking policies fits with what is obvious and reasonable.

[68]     I am satisfied on the evidence that the bank’s approach to lending precluded as a matter of policy, and would also have precluded on the facts, the making of a promise of the type Ms Ting alleges.

Conscience as the touchstone

[69]     Mr Ting asserts an estoppel which arises as a matter of equity.   Where an expectation has been created, equity will prevent retreat from that expectation if it is unconscionable for the creator of the expectation to do so.

[70]     As observed by Tipping J in delivering the judgment of the Court of Appeal in National Westminster Finance NZ Ltd v National Bank of NZ Ltd:16

The decisions of this Court in [Wham-O MFG Co v Lincoln Industries and Gillies v Keogh] have emphasised the element of unconscionability which runs through all manifestations of estoppel. The broad rationale of estoppel, and this is not a test in itself, is to prevent a party from going back on his word (whether express or implied) when it would be unconscionable to do so.

[71]     The criteria for assessing whether an estoppel may have arisen, which I have examined, are inherently part of any assessment of unconscionability.  For example, the extent to which reliance on a particular statement may have been unreasonable will be directly relevant to the assessment of the representor’s conscience.  Similarly

relevant will be the occurrence of intervening circumstances.17

[72]     There   is   a   further,   most   important   feature   in   the   assessment   of unconscionability issues in this case.  It lies in the undisputed failure of Ms Ting or Mr Ting to actually apply to the bank for construction loans in 2011.  The defendant did not seek to hold the bank to an alleged promise in early 2011 when the defendant says the bank ought to have honoured its promise.  When an alleged promise is said to be oral, and when it forms no part of the bank’s record, it is not unconscionable

for the bank to assert, as it does in this proceeding, that it is not bound by any oral

16     National Westminster Finance NZ Ltd v National Bank of NZ Ltd [1996] 1 NZLR 548 (CA) at

549.

17     See James Every-Palmer “Equitable Estoppel” in Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) 601 at 621, referring to judgments in the House of Lords in Thorner v Majors [2009] 1 WLR 776 per Lord Scott at [19] and per Lord Neuberger at [88]-[89] and [101]-[102].

indication of the kind alleged.  The defendant's failure to raise the possibility of a loan at the time a loan was needed removes any arguable level of unconscionability.

Conclusion – Drawing the threads together

[73]     There is no basis for a finding of an equitable estoppel which would bind the bank in this case.  As that is the only affirmative defence pursued to hearing for the defendant by Mr Ting, and as the bank’s case in contract is otherwise made out to the standard required on a summary judgment application, there must be judgment for the plaintiff.

[74]     Costs must follow the event.

[75]     The level of costs involves an exercise of the discretion under r 14.1 High Court  Rules  and  I have  regard  particularly to  r  14.6(3)(b)(ii):  -    the  defendant pursued a number of arguments which lacked merit and contributed unnecessarily to the time and expense of this proceeding.

Judgment

[76]     I order:

(a)       There is judgment for the plaintiff against the defendant in the sum of

$223,951.01  together  with  interest  and  charges  at  the  plaintiff ’s applicable rates from and including 18 October 2012 down to the date of this judgment.

(b)The defendant is to pay to the plaintiff the costs of this proceeding on the basis of a 2B calculation with an uplift of 50 per cent, together with disbursements to be fixed by the Registrar.

(c)      Counsel for the plaintiff is to file and serve within five working days a memorandum  setting  out  the  relevant  calculations  of  interest  and

charges and of costs and disbursements, whereupon I shall fix those items on the papers.

Associate Judge Osborne

Solicitors:

Morgan Coakle, PO Box 114, Shortland Street, Auckland 1140

Corban Revell, PO Box 21180, Auckland 0650