ASB Bank Ltd v Lin - [2014] NZHC 106

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-4486 [2014] NZHC 106

BETWEEN ASB BANK LIMITED Plaintiff

ANDRUI YU LIN First Defendant

QIAN GUAN CHEN Second Defendant

Hearing: 5 February 2014

Appearances: N Moffat for Plaintiff
A Kashyap for Defendant

Judgment: 5 February 2014

ORAL JUDGMENT OF ASSOCIATE JUDGE BELL

Solicitors:
Bell Gully, Auckland, for Plaintiff
Aaron Kashyap, Epsom, Auckland, for Defendants

ASB BANK LIMITED v LIN and CHEN [2014] NZHC 106 [5 February 2014]

[1] The defendants have applied for a stay of enforcement pending their appeal to the Court of Appeal. On 26 September 2013 Peters J gave judgment against the defendants to the plaintiff for $134,350.68 plus interest and costs, a total of
$160,683.28. In October 2013 the defendants filed an appeal against this judgment and in November they applied for a stay of execution pending the appeal.

[2] The bank advises that it issued bankruptcy notices following the judgment, but those bankruptcy notices have not been served yet. Mr Moffatt says that in his view the notices are now likely to be stale and it will be necessary to issue fresh bankruptcy notices. The bank has held its hand on enforcement to await the outcome of this application.

Background

[3] The defendants are wife and husband. They, and two companies with which they are associated, borrowed from ASB Bank Ltd. The companies are Qian Kun International Ltd and Jack’s Ventures Ltd. The defendants cross-guaranteed each other’s borrowings from the bank and they each gave written guarantees for the borrowings by Qian Kun International Ltd and Jack’s Ventures Ltd. While the bank had security by way of guarantees for borrowings by Jack’s Ventures Ltd, and those guarantees were secured by mortgages over properties owned by the defendants, Jack’s Ventures Ltd did not give any security over any land it owned or over its other assets, for example, by way of a general security agreement.

[4] The defendants defaulted in meeting their obligations to the bank under their personal borrowings from July 2011 onwards. Jack’s Ventures Ltd defaulted from about September 2011 onwards. The bank made demands in October 2011, and followed up with notices under ss 119 and 122 of the Property Law Act 2007. When the defaults were not remedied, the bank had properties owned by the defendants, subject to mortgages, sold up. The bank’s case was that after it had sold up these properties there was a shortfall. The bank applied the proceeds of the sales towards the debt owed to it by Jack’s Ventures Ltd ahead of the defendants’ personal

indebtedness. The result was that Mr Chen, the second defendant, owed some

$71,745.62 and his wife owed $63,605.06. That left a residual debt owed by them both of $135,350.68. Those sums can be combined because they had guaranteed each other’s indebtedness to the bank. The bank’s case relied on standard bank term loan documents and standard bank guarantees which are drawn to protect the bank’s position in a wide variety of circumstances.

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.

Continue reading ASB Bank Ltd v Lin

Details

AGLC: ASB Bank Ltd v Lin [2014] NZHC 106
Case: [2014] NZHC 106
Decision Date: 5 February 2014

CaseChat Overview and Summary

In this case, the plaintiffs, ASB Bank Limited, sought enforcement of a money judgment against the defendants, Rui Yu Lin and Qian Guan Chen. The defendants had defaulted on their obligations to the bank and the bank had sold their properties to cover the debt. The defendants appealed the judgment and sought a stay of enforcement pending their appeal. The legal issues before the court were whether the bank owed any duty to the defendants by reason of the way it made advances to Jack’s Ventures Ltd without taking security and whether the bank breached the duty owed to the defendants under section 176 of the Property Law Act 2007. The court found for the bank on both issues. The defendants intended to argue on appeal that the bank should have provided them with more protection when they gave their guarantee. However, the court found that the defendants had an uphill task with their appeal. The court considered the principles for granting a stay pending appeal and found that the appropriate assurance for the bank to provide was a written undertaking that if the appeal goes against the bank, the bank will forthwith refund to the defendants any proceeds of the judgment which the bank has received pending hearing of the appeal. The court ordered a stay of enforcement of the judgment until the bank provides that undertaking. The bank was awarded costs on a 2B basis.

Orders