ASB Bank Limited v Ward - [2015] NZHC 2909

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2014-488-135 [2015] NZHC 2909

BETWEEN
ASB BANK LIMITED

Plaintiff

AND

JILL DENISE WARD AND

MARTIN WARD Defendant

Hearing: 12 June 2015

Appearances:

E C Gellert for Plaintiff
Defendants in person

Judgment:

20 November 2015

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 20 November 2015 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules
……………………………………………………
Registrar/Deputy Registrar

Solicitors:
Simpson Grierson (E C Gellert) Auckland, for ASB Bank

ASB BANK LIMITED v WARD AND WARD [2015] NZHC 2909 [20 November 2015]

INDEX

Paragraph Introduction [1] The Wards’ Complaint to the Banking Ombudsman [11] Irresponsible lending [13] Securitisation [16] Release of Mrs Ward [18] Disclosure under the Credit Contracts and Consumer Finance Act [21]

Oppression under the Credit Contracts and Consumer Finance Act [32] Non-disclosure [39] Belated reamortisation of a term loan [42] Fees and third party payments [47]

Breach of s 176 of the Property Law Act 2007 [48] Mr Ward’s attempt to recover chattels [63] Result [68]

Introduction

[1] ASB Bank Ltd sues Mr and Mrs Ward for $271,046.06 as the outstanding amount owing after it sold Mrs Ward’s property at 17 Dolphin Place, Tutukaka as mortgagee. Mrs Ward is the borrower. Mr Ward gave a guarantee. The bank applies for summary judgment.

[2] Some facts are not in dispute. Mrs Ward bought the Dolphin Place property in June 2004 with a loan from the bank. The bank took a registered first mortgage over the property. In 2005, she borrowed from the bank again to buy a property at
14 Taonga Lane, Tutukaka. A company, Poor Knights Dive Stay Ltd, took title. In October 2006 she borrowed again to buy a property at 33A Kopipi Crescent, Ngunguru in the name of a company, Bach 33 Ltd. In March 2007, Mr Ward gave a guarantee on the bank’s standard form in support of Mrs Ward’s obligations to the bank.

[3] Mr and Mrs Ward had difficulty keeping up their payments. They first fell behind in 2007. The Wards’ position worsened with the closure in 2008 of the Oceans Hotel where their business was located. The Kopipi Crescent property was sold in September 2009. The Taonga Lane property was sold in June 2010. The Wards still struggled. There were further defaults. One of the loans was reamortised. Mrs Ward put the Dolphin Place property on the market in December
2011 with a listing price of $640,000 but was not able to sell it. From time to time arrangements were negotiated between the bank and the Wards for arrears to be paid off. The bank served notices under the Property Law Act 2007 in August 2012 and January 2013. Each time the defaults in the notices were remedied. In June 2013, the bank served a notice under s 119 of the Property Law Act on Mrs Ward and a notice under s 122 of the Property Law Act on Mr Ward. This time the defaults…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] NZHC 2909
Decision Date: 20 November 2015

CaseChat Overview and Summary

ASB Bank Limited sued Mr and Mrs Ward for $271,046.06, the outstanding amount owed on loans secured by a mortgage on Mrs Ward's property at 17 Dolphin Place, Tutukaka, after the bank sold the property as mortgagee. The bank applied for summary judgment. The Wards had difficulty keeping up their payments. The bank served notices under the Property Law Act 2007 in August 2012 and January 2013. Each time the defaults in the notices were remedied. In June 2013, the bank served a notice under s 119 of the Property Law Act on Mrs Ward and a notice under s 122 of the Property Law Act on Mr Ward. This time the defaults were not remedied. The bank gave notice to the Wards that all monies secured under the mortgage had become due and payable. The bank obtained a report from a registered valuer as to the market value and forced sale value of the Dolphin Place property. The valuer found the market value to be $390,000 and gave a forced sale value of $270,000 to $310,000. The bank instructed Whangarei land agents, the local Bayleys franchise, to market the property. After an auction on 3 October 2013 the property was sold for $357,000 with settlement set for 31 October 2013. The net proceeds from the sale of the Dolphin Place property were $339,366.91, leaving a balance of $271,046.06 under the loans. The bank claims that sum plus interest at five per cent per annum from 17 October 2013. The Wards raised several issues, including that the bank breached s 176 of the Property Law Act 2007 by not taking reasonable care to obtain the best price reasonably obtainable at the time of sale. The bank argued that it had followed the guidance offered by Asher J in Public Trust v Ottow and had complied with its duty under s 176. The Wards criticised the report by the registered valuer for omitting certain sales which they considered relevant. The valuer's affidavit in reply addressed those concerns and gave satisfactory reasons why the sales the Wards referred to were either irrelevant (because they were too old) or were consistent with his valuation. The valuer's report was guidance to the bank as to how it could comply with its duty under s 176. The Wards also challenged the marketing by the land agent. They do not criticise how widely the property was marketed. The issue is the quality of the advertising. They made these points: the property was wrongly portrayed as only fit for demolition; there were spelling mistakes in one advertisement; photographs taken of the property seemed to demonstrate only the negative aspects; the property enjoys uninterrupted sea views to the Poor Knights Islands but that was not adequately shown; the agent referred to some purchasers expressing a concern about asbestos. That concern should have been addressed. It apparently was not. The land agent's marketing analysis described the property as "in a shocking state" and "unfit for habitation". Mrs Ward says that that is a gross exaggeration, intended to undervalue the property. On the Wards' case the property was unkempt, but the house was habitable. They note that purchasers have not undertaken any significant renovations since taking title. The Wards' claim for breach of s 176 of the Property Law Act 2007 can give rise to a reduction in liability of no more than $33,000. The Wards also have an arguable claim for conversion of chattels for no more than $15,000. The bank has not shown that the Wards do not have defences to its claim to the extent of the total sum of $48,000. In all other respects, the Wards do not have any defence to the bank's claim. The bank is accordingly entitled to judgment for the amount remaining outstanding under all the loans on settlement of the sale of the Dolphin Place property - $271,046.06 but with an allowance of $48,000, leaving a judgment sum of $223,046.06. The bank is entitled to continue the case through to a hearing to test the Wards' defences. The parties may consider transferring the proceeding to the District Court.

Orders