ASB Bank Limited v Davis

[2021] NZHC 1812

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-000939

[2021] NZHC 1812

BETWEEN

ASB BANK LIMITED

Plaintiff

AND

CHRISTOPHER EDWARD DAVIS

First Defendant

YVETTE MAY DAVIS

Second Defendant

Hearing:	22 April 2021
Appearances:	J Caird and S Hawksworth for the Plaintiff Defendants in Person
Judgment:	16 July 2021

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 16 July 2021 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Simpson Grierson, Auckland

ASB BANK LTD v DAVIS [2021] NZHC 1812 [16 July 2021]

Introduction

[1]                  Mr and Mrs Davis owned and ran a trucking business called Grays Transport NZ Ltd. In 2015 they refinanced the company’s loans from Westpac to ASB. They each gave a personal guarantee and indemnity as required by ASB. The company began to experience financial difficulties in 2016. The company’s position deteriorated and in July 2018 it defaulted on its loans with ASB. ASB demanded repayment of the loans from the company, and Mr and Mrs Davis as guarantors. The demand was not met. ASB repossessed and sold two trucks. A shortfall remained. ASB now claims the shortfall of $502,181.42 plus interest and costs from Mr and Mrs Davis under the guarantee.

[2]                  Mr and Mrs Davis maintain that the guarantee they gave related to an earlier facility agreement, which ASB withdrew. They say that the guarantee is invalid as it does not attach to any facility agreement.

[3]                  They also counterclaim that ASB was negligent in several ways. They claim that ASB should have explained to them the nature and effect of the documents they were signing, including the guarantee. They claim that ASB should have registered a security interest over two trailers owned by the company. They contend that when the company’s financial position deteriorated, ASB gave them negligent financial advice and failed to sell the company’s assets soon enough.

[4]                  ASB applies for summary judgment of its claim against Mr and Mrs Davis; and for summary judgment and/or strike out of their counterclaim.

[5]                  I need to decide whether Mr and Mrs Davis have no defence to ASB’s claim; and whether their counterclaim has no prospect of success. This requires me to decide the following questions.

ASB’s claim

(a)Did the guarantee given by Mr and Mrs Davis guarantee the company’s December facility agreement?

The Davis’s counterclaim

(b)Did ASB owe Mr and Mrs Davis a duty of care to explain the nature and effect of the guarantee?

(c)If so, did ASB breach that duty of care, causing Mr and Mrs Davis loss?

(d)Did ASB owe Mr and Mrs Davis a duty to obtain and register a security interest over two of the company’s trailers?

(e)If so, did ASB breach that duty, causing loss to Mr and Mrs Davis?

(f)Did ASB provide Mr and Mrs Davis with negligent financial advice which they relied on to their detriment?

(g)Did ASB owe Mr and Mrs Davis a…