Bank of New Zealand v Garnham
[2016] NZHC 1144
•30 May 2016
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2015-485-447 [2016] NZHC 1144
BETWEEN THE BANK OF NEW ZEALAND
Plaintiff
AND
MICHAEL ROBERT GARNHAM First Defendant
MICHAEL BRIAN SPACKMAN Second Defendant
PRIME COMMERCIAL LIMITED Third Defendant
BALLANTYNE BARKER HOLDINGS LIMITED
Fourth Defendant
SAMS BAY HOLDINGS LIMITED (IN LIQUIDATION)
Fifth Defendant
CRIFFEL DEER LIMITED Sixth Defendant
Hearing: 12 February 2016 Counsel:
R Gordon and D McKenzie for the Plaintiff
J Sumner and E M Currie for the DefendantsJudgment:
30 May 2016
JUDGMENT OF ASSOCIATE JUDGE SMITH
[1] The plaintiff (the Bank) applies for summary judgment for recovery of unpaid loans which at the date of the hearing were alleged to total $6,501,366.20. The Bank also applies for an order for vacant possession of certain properties in
Seatoun, Wellington (the Seatoun properties), which are owned by the second
THE BANK OF NEW ZEALAND v MICHAEL ROBERT GARNHAM [2016] NZHC 1144 [30 May 2016]
defendant (as trustee of a trust known as the Miro Trust (the Trust) and occupied by the first defendant, Mr Garnham.
[2] The Bank holds a mortgage over the Seatoun properties, and says that it has the right to take possession of the Seatoun properties under s 137 of the Property Law Act 2007 (the Act). The Bank wishes to have vacant possession so that it can effect a mortgagee sale of the Seatoun properties in a manner most likely to realise the best prices. It says that it has asked Mr Garnham to deliver up vacant possession, but he has refused or neglected to do so.
[3] Mr Garnham is an experienced commercial solicitor in Wellington, and the second to fifth defendants are all entities in which Mr Garnham has an interest. Mr Garnham is the sole director of the third defendant (Prime), and is also a director of the fourth defendant (BBHL), the fifth defendant (Sams Bay) and the sixth defendant (Criffel).
[4] For convenience, I will refer to the defendants collectively as “the group”.
The Bank’s claims
[5] The Bank’s claims for $6,501,366.43 as at the date of the hearing were made up as follows:
(1)claims against BBHL for advances made to BBHL (and against the first to third defendants as guarantors of BBHL’s liability):
$1,957,324.74 plus interest and costs
(2)claims against the second defendant as trustee of the Trust for advances made to the Trust (and against Mr Garnham, Prime, BBHL and Sams Bay as guarantors of the Trust’s liability):
$4,182,637.19 plus interest and costs
(3) claims against Prime for advances made to Prime (and against
Mr Garnham, the Trust and BBHL as guarantors of Prime’s liability):
$105,760.06 plus interest and costs
(4)claims against Mr Garnham for advances made to him (and against the Trust, Prime, BBHL and Sams Bay as guarantors of Mr Garnham’s liability):
$15,347.80 plus interest and costs
(5) claims against Criffel for advances made to Criffel (and against
Mr Garnham, Prime and Sams Bay as guarantors of Criffel’s liability):
$240,296.64 plus interest and costs.
[6] The Bank’s lending to BBHL was secured by a first registered mortgage over a property in Wanaka, and by a General Security Agreement over all of BBHL’s present and after-acquired property. The lending to the Trust was secured by a first registered mortgage over the Seatoun properties, and by a first mortgage over a property in Takaka (the Takaka property).
[7] By Deed of Guarantee dated 4 May 2011 (the interlocking guarantees), each of Mr Garnham, Prime, BBHL and Mr Spackman (in his capacity as trustee of the Trust) gave interlocking guarantees to the Bank, the effect of which was that each assumed liability as guarantor for all amounts for which any of the others might be or become liable (as customer) to the Bank. The interlocking guarantees were unlimited as to the amount guaranteed, and each guarantor was jointly and severally liable. However Mr Spackman’s liability as guarantor was limited to the extent of the value of the assets of the Trust available from time to time (except where that value had been diminished by any breach of trust caused by any wilful default or dishonesty on his part).
[8] Under cl 15.1 of the interlocking guarantees, the guarantors were required to pay the Bank “without any set-off or counterclaim and without any deduction or withholding”.
[9] On 25 May 1998 and 20 July 1998 Sams Bay provided separate guarantees of Mr Spackman’s liability in his capacity as trustee of the Trust and Mr Garnham’s liabilities. However Sams Bay was put into liquidation by order of the Court on 27
April 2016, and it appears that the Bank’s claim against Sams Bay cannot be pursued further without the consent of Sams Bay’s liquidator or the consent of the Court.1
However that is a matter which counsel were necessarily unable to address at the hearing, and in case there is an argument available to the Bank that judgment may be entered against Sams Bay notwithstanding the post-hearing liquidation of the company, I will adjourn the summary judgment application against Sams Bay on the basis that the Bank may file a memorandum, which is to be served on the liquidator, advising any basis on which the Court can and should enter a judgment against Sams Bay.
[10] Since the hearing, the Takaka property has been sold. On 17 March 2016,
$2,741,504.05 was paid to the Bank from the proceeds of sale. The result of that partial repayment is that the loans which were the subject of the Bank’s third, fourth and fifth causes of action (those described in paras 5(c), (d), and (e) above) have now been repaid. The application for summary judgment is accordingly now limited to the claims in the first and second causes of action, and the claim for possession of the Seatoun properties.
[11] By memorandum dated 24 March 2016, Mr Gordon advised that the Bank’s
revised claims totalling $3,815,668.63 are as follows:
(a) on its first cause of action (relating to advances made to BBHL) against
Mr Garnham, the Trust, Prime and BBHL, jointly and severally, the amount of $911,512.29. That sum is made up as follows:
1 Companies Act 1993, s 248(1)(c).
(i) on the amount owing under an advance described as the Second Ballantyne Loan facility (being the amount claimed of
$831,609.51 less a part payment of $3,976.89 received on
13 July 2015): $827,632.62
(ii) interest on the sum of $827,632.62 at the rate of
12.29% per annum from 28 May 2015 until 24 March 2016 (301 days at $278.67 per day): $83,879.67
(b) on its second cause of action (relating to advances made to the Trust) against Mr Garnham, the Trust, Prime, BBHL and Sams Bay, jointly and severally, the amount of $2,904,156.34. That sum is made up as follows:
(i) the amount owing under an advance to the Trust described as the Trust Property Plus Term Loan Facility (being the amount claimed of $1,945,129.23 less a part payment of $591,847.44 received on 17 March 2016): $1,353,281.79
(ii) interest on the sum of $1,945,129.23 owing under the Trust
Property Plus Term Loan Facility at the rate of
12.29% per annum from 28 May 2015 until 17 March 2016 (294 days at $654.95 per day): $192,555.30
(iii) interest on the sum of $1,353,281.79 (the reduced amount owing under the Trust Property Plus Term Loan Facility) at the rate of
12.29% per annum from 18 March 2016 until 24 March 2016 (7 days at $455.67 per day): $3,189.69
(iv) the amount owing under a facility described as the First
Housing Term Loan Facility (being the amount claimed of
$1,274,348.80 less a part payment of $10,322.91 received on
25 June 2015): $1,264,025.89
(v) interest on the sum of $1,264,025.89 owing under the First Housing Term Loan Facility at the rate of 8.74% per annum from 28 May 2015 until 24 March 2016 (301 days at $302.67 per day): $91,103.67
(c) the claims for possession of the Seatoun properties, and for costs against all defendants, remain.
The defaults and the Bank’s payment demands
[12] Prime and BBHL both defaulted when certain term loans they had obtained from the Bank fell due for repayment on 7 September 2014. The loan to Prime was for $100,000 and the loan to BBHL was for $928,000.
[13] The Bank made demand for repayment of the two expired loans on 8 and
10 September 2014. Default notices under ss 119 and 122 of the Act were issued on
24 September 2014. The defaults identified in the notices were the failures to repay the expired loans.
[14] The notices under the Act expired unremedied on 12 November 2014, and on
14 November 2014 the Bank issued call-up notices. The Bank says, and (subject to their specific affirmative defences) the group do not dispute, that from that point onwards all sums owing to the Bank and secured by the subject mortgages had become due and payable in full.
The defendants’ opposition
[15] The group have filed a notice of opposition and a statement of defence in which they plead various affirmative defences, including misrepresentation by the Bank, breach of the Bank’s obligations under the Fair Trading Act 1986 (the FTA), mistake, and non est factum.
[16] These defences all arise out of a contention by the group that, when certain facilities granted by the Bank to the Trust were amalgamated and refinanced in July 2013, the amalgamated facility was to continue on an interest-only basis, with
no obligation to make repayments of principal. The two loans to the Trust which were refinanced in July 2013, were a loan for $1.4 million made on 15 April 2011 and a loan for $400,000 made on 31 August 2012. Until July 2013 these loans had been an interest-only basis. The July 2013 rearrangement involved the repayment of the two loans, and the Bank advancing the $1.8 million as a new loan with a two year term. This $1.8 million advance is the same advance as that described as the “Trust Property Plus Term Loan Facility” in para [11](b)(i)-(iii) of this judgment.
[17] The group make similar allegations about a $750,000 advance the Bank had made to BBHL on 15 April 2011, which was also refinanced in July 2013.
[18] The group say that the group members who signed the July 2013 refinancing documents were misled into believing that there would be no principal repayments. In fact, the refinancing documents did provide for monthly repayments of principal in addition to interest, a fact which the group apparently did not pick up when the refinancing documents were signed. The result of the inclusion of the principal repayments was that the group’s total monthly instalments rose from approximately
$39,200 to approximately $56,400.
[19] In addition to the various defences arising out of the July 2013 refinancing, the group say that they had a reasonable expectation, based on the pervious dealings between the parties, that the Bank would roll over the facilities which expired on 7
September 2014.
[20] There is a dispute between the parties as to what was said in the negotiations leading to the July 2013 loan rearrangement. Mr Garnham acknowledges that Mr Plummer of the Bank did say at a meeting on 26 March 2013 that the Bank wanted to introduce capital reductions as a requirement of the refinancing. However Mr Garnham says that he strongly resisted that suggestion, and that at the meeting held on 21 June 2015 Mr Plummer confirmed that the Bank would not be insisting on further capital reductions: the loans would be rolled over on an interest-only basis for two years. Mr Garnham says that there was no negotiation or correspondence in relation to placing either of the two loans to the Trust on a table basis. Nor did the
Bank give any indication that the material terms of the two loans would change in any way which would be adverse to the Trust.
[21] Mr Plummer rejects that account of the negotiations. He says that the Bank’s requirement for principal reductions was made clear at the 21 June 2013 meeting, and the loan refinancing documents subsequently sent to the defendants reflected that requirement.
[22] In the event, it is not necessary to resolve the dispute over the terms of the July 2013 refinancing in this judgment. That is because of a concession made by the Bank, to which I now turn.
The Bank’s concession on the arguments about the July 2013 refinancing
[23] After the proceeding had been served, the group filed an interlocutory application in which they sought particular discovery from the Bank, and a direction that two officers of the Bank who had filed affidavits in support of the Bank’s application for summary judgment be required to attend for cross-examination. Both
applications were dismissed in a judgment I gave on 23 November 2015.2
[24] At the hearing of that application, Mr Gordon advised that the Bank, while rejecting the claims of non est factum, misrepresentation, breach of the FTA and mistake which the group make in respect of the July 2013 refinancing, accepts that those claims are not suitable for determination on a summary judgment application. But the Bank submits that it is entitled to summary judgment anyway, because it is not relying on any defaults under the facilities which were the subject of the July
2013 refinancing. It says that defaults by Prime and BBHL under other facilities, which expired on 7 September 2014, had the effect of triggering the group’s liability on all of the group’s facilities with the Bank. The defaults on the other facilities had no connection with the July 2013 refinancing, and would have occurred anyway. The Bank contends that there is no arguable causal connection between the group’s complaints about the July 2013 refinancing and the defaults by Prime and BBHL
which occurred approximately 14 months later.
2 Bank of New Zealand v Garnham [2015] NZHC 2922.
[25] I referred to the Bank’s concession in my judgment on the group’s
interlocutory application, in the following terms:
The effect of [the Bank’s acknowledgement that [the group’s] arguments of breach associated with the July 2013 refinancing were not suitable for summary judgment] would appear to be that the only questions likely to arise at the summary judgment hearing will be:
(a) did [the group] have a reasonable expectation that the facilities falling due in September 2014 would be rolled over (and if so does that reasonable expectation provide them with an arguable defence)?
(b) if not, how did any belief of [the group] that the instalment amounts which would be payable following the July 2013 refinancing would not include payments of principal, relevantly contribute to the September 2014 defaults under the unrelated facilities (if at all)?
The evidence on the reasonable expectation of roll over argument
[26] On 28 July 2014 the Bank made a formal offer for the restructure of all of the group’s debt. The restructure would have involved consolidating the group’s borrowings, and the extension of all loan facilities out to 31 March 2015. The Bank’s restructure offer remained open for acceptance until 15 August 2014.
[27] On 5 August 2014, Mr Garnham met with Mr Willdig and Mr Plummer of the Bank to discuss the Bank’s offer of 28 July 2014. A diary note of the meeting produced by Mr Willdig noted that the group was having difficulty complying with the reporting requirements of one of its other lenders, the ANZ Bank. The note recorded Mr Garnham’s apology for the group’s failure to make debt repayments or meet the Bank’s interest costs. The note also recorded Mr Garnham’s advice that the ANZ Bank was not prepared to accommodate further lending, and that there would be no surplus cash available from two of the group’s substantial commercial property investments to meet the Bank debt commitments.
[28] By letter dated 15 August 2015, Mr Garnham declined the Bank’s 28 July offer to restructure the group’s facilities. He took issue with the interest that would be payable under the Bank’s proposal, and with “the level of additional documentation/recording/securitisation that is proposed”. Mr Garnham put forward a counter-offer, in which he proposed that repayments across the group would be
interest-only through to 31 March 2015, with interest at a lower rate that would have resulted in payments of about $31,790 per month.
[29] The Bank responded on 21 August 2014, advising that the intent of its
28 July 2014 offer had been to provide time for the sale of assets, to reduce the overall group debt and demonstrate the group’s ongoing financial viability. If that was not agreeable to the defendants, the repayment of the loans would be required. The Bank said:
Refinance and/or a sale of assets sufficient to fully repay the outstanding [Bank] indebtedness represent alternative options available to the Directors/Trustees if it is not intended to proceed on the basis of the terms and conditions outlined in the Bank’s Letter of Offer. We look forward to your alternative proposals by close of business on 7 September 2014 for repayment of the [Bank] indebtedness if this is the case.
We look forward to your response.
[30] The group made no response to the Bank’s letter of 21 August 2014. There was therefore no restructure of the loans, and the two facilities falling due on
7 September 2014 expired at the close of business on that date.
[31] In support of the reasonable expectation of rollover argument, Mr Garnham relies on his relationship with the Bank for almost 40 years, and the fact that he had enjoyed a substantial and mutually profitable business relationship with the Bank from the time he and his wife had bought their first home. He also refers to the Bank having refinanced other loans in the past, and to the fact that, following the group’s complaints about the July 2013 refinancing, the parties conducted themselves in a manner where they both reserved their positions.
The evidence on the group’s argument that breaches by the Bank associated with the July 2013 refinancing caused or contributed to the September 2014 defaults by Prime and BBHL
[32] Following the July 2013 refinancing, the monthly instalments payable to the Bank by the group for all facilities totalled approximately $56,000. The group continued to pay the instalments at that rate for the remainder of 2013, and did not formally raise any issue over the inclusion of principal in the monthly payments until
25 February 2014, when Mr Garnham wrote to the Bank setting out the complaints
which the group now advance in opposition to the summary judgment application. Even then, the group did not immediately stop or reduce the monthly payments.
[33] However in June of 2014 the group stopped making payments to the Bank altogether. No payments were made for a period of five months. By then, the Prime and BBHL facilities, which were due for repayment on 7 September 2014, had expired.
[34] The group resumed payments in October 2014, but chose to pay only $27,500 per month, that amount being Mr Garnham’s calculation of monthly interest on what he understood to be the group’s total indebtedness, calculated at the rate of
5.85 per cent per annum (which Mr Garnham considered would have been a reasonable market rate in 2013).
[35] Mr Willdig says that the monthly payments of $27,500, which commenced in October 2014 after the Bank had made demand for repayment of all facilities, continued into 2015, but ceased in August 2015. In an affidavit sworn on
1 February 2016, he deposed that no payment had been received from the group since the last payment of $27,500 was made on 13 August 2015.
[36] The Bank says that the real reason for the defaults on the Prime and BBHL facilities which expired on 7 September 2014, was that the group had by then run into difficulties in its relationship with the ANZ Bank.
[37] Mr Willdig refers to his notes of the meeting of 5 August 2014, and in particular the note of Mr Garnham’s advice that the ANZ Bank would not accommodate any new lending, and had since instigated a “cash sweep”, taking all of the rental income from Sams Bay’s two major commercial property investments.
[38] In his letter to the Bank of 15 August 2014, Mr Garnham referred to the group’s ongoing attempts to refinance the lending on one of the major commercial property investments, and to “exit ANZ as financier”. Mr Garnham went on to say:
Apart from the level of debt servicing which involved the capital reduction proposals for [Bank] debt, the real issue has been our ability to access those
revenues with ANZ constraints – and a level of arbitrariness about the regularity of our drawings.
Plaintiffs’ applications for summary judgment – legal principles
[39] Rule 12.2(1) of the High Court Rules provides:
12.2Judgment when there is no defence or when no cause of action can succeed
(1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[40] The principles to be applied in considering an application for summary judgment have been clearly established through decisions of the Court of Appeal such as Pemberton v Chappell 3, Grant v NZMC Ltd 4 and Westpac Banking Corporation v M M Kembla New Zealand Ltd.5 The following broad principles are to be applied:
(a) The plaintiff must satisfy the Court that the defendant has no arguable defence to the claim brought against it. The issue is whether there is a real question to be tried.
(b)It is generally not possible to determine disputed issues of fact based on affidavit evidence alone, particularly when issues of credibility arise. Issues of law, even though they may be complex, can, however, be determined in an application for summary judgment.
(c) Although the Court should adopt a robust approach, summary judgment may be inappropriate where the ultimate determination turns on a judgment that can only properly be reached after a full hearing of all the evidence.
[41] And in Krukziener v Hanover Finance Ltd the Court of Appeal said:6
3 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.
4 Grant v NZMC Ltd [1989] 1 NZLR 8 (CA).
5 Westpac Banking Corporation v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA).
6 Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162 at [26].
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Leutchmanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ
84 (CA).
The parties’ submissions
The Bank
[42] Mr Gordon submits that, once the focus is properly put on the expiry of the two facilities on 7 September 2014, all of the group’s opposition as pleaded falls away.
[43] There is no dispute that the two loans which expired on 7 September 2014 have not been repaid, nor any dispute that the default in repaying those facilities had the effect of accelerating the group’s liabilities under all of their facilities with the Bank.
[44] On the question of whether any misrepresentation, mistake, non est factum, or breach of the FTA associated with the July 2013 refinancing may have caused or contributed to the defaults by Prime and BBHL in failing to repay the facilities which expired on 7 September 2000, Mr Gordon submits that there is no linkage. Any such causation argument is defeated on the facts, because of the group’s adoption of the “self-help remedy” of cancelling monthly payments altogether between June and October 2014. Their express intention in so doing was to recoup what they contended were losses caused by the Bank’s alleged breaches in respect of the July 2013 refinancing.
[45] Mr Gordon submits that, if and to the extent the group did suffer loss as a result of any such breach (which the Bank denies), they clearly recouped the loss in the following year.
[46] Mr Gordon acknowledges that, in theory, an additional cash flow burden arising from any breach of duty committed by the Bank in respect of the July 2013 refinancing could have been sufficient to “tip over” the group, but he submits that there is no evidence that it did. The group in fact continued to pay at the full rate required by the various facility documents until May 2014, and they then recouped any earlier losses by withholding the payments which fell due between June and October 2014.
[47] On the issue of the alleged expectation that the loans expiring in September 2014 would be rolled over, Mr Gordon points to the fact that the group were told that there would be no rollover, and there was nothing in the facility documentation itself which entitled them to have the expiring facilities rolled over. He refers to the Bank’s letter of 28 July 2014 and Mr Garnham’s letter dated 15
August 2014 in reply. There was no agreement on a roll-over at that point, and no basis on which the group could have had any reasonable expectation of a rollover on
7 September 2014.
[48] Mr Gordon submits that there is nothing in that evidence which entitled the defendants to expect that the loans would be rolled over when they reached their expiry dates on 7 September 2014. The claimed ‘right’ amounts to an assertion that, because the members of the Garnham Group were existing customers of the Bank, the Bank was (in effect) obliged to fund their borrowings in perpetuity (and on interest-only terms which were acceptable to the defendants).
[49] On the claim for possession of the Seatoun properties, Mr Gordon submits that the Bank will be prejudiced if it is unable to show prospective buyers through the properties. He refers to the Bank’s powers of sale and possession as mortgagee, and relies on s 137(1)(c) of the Act for jurisdiction.
[50] Section 137(1) of the Act provides:
(1) If a mortgagee becomes entitled under a mortgage, after compliance with subpart 5, to exercise a power to enter into possession of mortgaged land or goods, the mortgagee may exercise that power by—
(a) entering into or taking physical possession of the land or goods peaceably and without committing forcible entry under section 91 of the Crimes Act 1961; or
(b) asserting management or control over the land or goods by requiring a lessee or occupier of the land, or a lessee or bailee of the goods, as the case may be, to pay to the mortgagee any rent or profits that would otherwise be payable to the current mortgagor; or
(c) applying to a court for an order for possession of the land or goods.
The defendants
[51] Mr Sumner submits that the Bank has framed the issues in the case too narrowly, in an attempt to avoid enquiry into its conduct associated with the July 2013 refinancing. He submits that the Bank’s relationship was with the group as a whole, and that it was aware that lending to some entities in the group could and did have direct effects and consequences on other entities within the group. What happened in relation to the July 2013 refinancing is consequently relevant, notwithstanding the Bank’s concession.
[52] Mr Sumner calculates the additional cashflow burden arising from the inclusion of principal repayments in the monthly instalments, at $206,826.76 per year, an amount which he says was significant enough to affect the cashflow position of the whole group.
[53] On the question of the existence of a causal link between the alleged breaches by the Bank associated with the July 2013 refinancing and the failure of BBHL and Prime to pay the loans which expired on 7 September 2014, Mr Sumner acknowledges that the group adopted the “self-help” measure of suspending all payments between June and October of 2014. But the effect of the Bank’s alleged breaches was so severe that the withholding of payments between June and October
2014 was not enough to rescue the situation and prevent the defaults by Prime and
BBHL when their loans fell due on 7 September 2014.
[54] Mr Sumner acknowledges that the group did not pick up the inclusion of principal in the monthly instalments until December 2013, but submits that that is either explained by various distractions which affected the conduct of the group’s businesses in the period between July and December 2013 (including an earthquake which interfered with Mr Garnham’s access to his office) or is otherwise insufficient to break the chain of causation which he says linked the Bank’s July 2013 breaches with the September 2014 defaults by Prime and BBHL.
[55] Mr Sumner emphasises that the Bank was well aware of the cashflow and capital expenditure pressures on the group when the July 2013 refinancing was being negotiated: Mr Garnham says he made it quite clear in the negotiations that those pressures were such that the group could not and would not agree to the imposition of significant capital reductions. Mr Sumner refers also to the Bank’s knowledge of the financial position of the various entities in the group, derived from disclosures made by those entities pursuant to covenants contained in their existing loan documents with the Bank.
[56] On the “reasonable expectation of rollover” issue, Mr Sumner relies on the relationship which had existed between Mr Garnham and the Bank over many years, and the history of some earlier loans having been rolled over. He did not identify any document, or statement in an affidavit, that would have “sheeted home” the reasonable expectation argument.
[57] Generally, the group says that its allegations of misrepresentation by the Bank, mistake over the question of inclusion of principal repayments in the monthly instalments (and the Bank’s failure to correct the group’s misapprehension in that regard), non est factum, and misleading or deceptive conduct by the Bank in breach of the FTA, are all reasonably arguable. And the claim to possession of the Seatoun properties is not suitable for determination by summary judgment if those defences are arguable.
[58] In those circumstances the group says that the application for summary judgment should be dismissed.
Discussion and conclusions
[59] Apart from questions of costs, I am only now concerned with the Bank’s first and second causes of action, respectively against BBHL and the Trust, and the claim for possession of the Seatoun properties.
Claims against the Trust
[60] Looking first at the claims against the Trust, there are two outstanding facilities which remain to be considered. First, there is the claim relating to the
$1.8 million facility which was the subject of the refinancing in July 2013. This is the “Trust Property Plus Term Loan Facility” (the Property Plus loan) which was drawn down by the Trust on 26 July 2013. The Property Plus loan is affected by the group’s arguments of misrepresentation, mistake, non est factum and breach of the FTA. The other facility is the First Housing Term Loan facility, which is referred to at para [11](b)(iv) and (v) of this judgment. For convenience, I will refer to this advance to the Trust as the First Housing Loan. I will consider the First Housing Loan first, and then address the claim for the balance under the Property Plus loan.
(i) The First Housing Loan
[61] The First Housing Loan was made to the Trust in November 2008. The amount was $1.25 million, and it was secured over both of the Seatoun properties and also over the Takaka property. The term was 25 years. There is no suggestion that the First Housing Loan was directly affected by the group’s allegations associated with the July 2013 refinancing.
[62] The Trust’s liability for the full amount of the First Housing Loan arose as follows. First, the Trust had failed to repay a smaller loan (since repaid) when that loan fell due for repayment on 7 September 2014. On 10 September 2014 the Bank sent to the Trust a formal demand for the sum of $142,046.59 owing under this smaller loan.
[63] The group does not dispute that the smaller loan fell due for repayment on 7
September 2014. In their statement of defence, they admit the Bank’s allegations in
that respect, but go on to plead that there was a reasonable expectation, based on previous dealings between the parties, that the Bank would roll over the facility.
[64] The Bank’s 10 September 2014 demand for repayment of the $142,046.59 was received by Mr Spackman on 15 September 2014. The demand required immediate repayment, but the Trust did not make any payment.
[65] On 1 October 2014, the Bank served on Mr Spackman separate notices under the Act dated 24 September 2014, requiring the Trust to remedy its defaults in failing to repay the smaller loan, and to discharge its obligations as guarantor of amounts said to be owing to the Bank by BBHL and Prime under unrelated facilities. A separate notice under the Act was sent in respect of each of the three mortgages which secured this indebtedness.
[66] The Bank’s 24 September 2014 notices required the Trust to remedy the defaults by 12 November 2014. The notices advised that if the defaults had not been remedied by that date, all amounts secured by the relevant mortgages would become payable, and the Bank’s powers under the mortgages to sell the mortgaged land or enter into possession would become exercisable. The total amount secured by the mortgages which would become due and payable if the defaults were not remedied, was said to be $5,239,952.22 plus accrued and accruing interest, and costs.
[67] On 8 October 2014, the Bank also served notices under s 122 of the Act in relation to the mortgaged properties, on Mr Garnham, Prime, BBHL, and Sams Bay.
[68] The First Housing Loan was one of the advances secured by the mortgages.
[69] The group admits in its statement of defence that the notices under the Act expired unremedied on 12 November 2014. They further admit that the Bank sent a further demand for payment to the Trust dated 14 November 2014, exercising its power of acceleration and demanding payment of all sums owing to the Bank under the Trust’s various facilities, including the First Housing Loan. They admit that did not comply with the Bank’s 14 November 2014 demand. They plead only that, at or
around this time, Mr Garnham and the Bank were engaged in discussions regarding the demands made and the wider group banking facilities.
[70] Subject to their affirmative defences arising out of the July 2013 refinancing, to the “reasonable expectation of rollover” argument, and to the limitation of Mr Spackman’s liability to the assets of the Trust, the group does not deny the Bank’s entitlement to exercise the power of acceleration which the Bank exercised by its letter dated 14 November 2014. Unless they have arguable defences on those issues, then, the Bank will be entitled to judgment on its claim for recovery of the First Housing Loan from Mr Spackman as borrower, and from Mr Garnham, Prime, and BBHL as guarantors.
[71] The defendants have not pleaded any entitlement to set off against the amount owing under the First Housing Loan any losses which the Trust may have suffered as a result of the alleged circumstances surrounding the July 2013 refinancing of other, unrelated facilities. It was for the Trust to put forward any claim to set-off, with sufficient particulars to show that there is a reasonably arguable set-off which should be permitted to go forward to trial. In this case, the First Housing Loan was entered into over four years before the events of July 2013 on which the Trust relies, and I see no sufficient connection between the liability under the First Housing Loan and the Trust’s claims in respect of the Trust Property Plus Term Loan that was negotiated in July 2013, which would justify a set-off of the kind discussed by the
Court of Appeal in Grant v New Zealand Motor Corporation.7
[72] Even if there were some connection between the two loans, the Trust and its guarantors have failed to persuade me that they have an arguable case that the connection is such that it would be contrary to good conscience permit the Bank to enforce the First Housing Loan without bringing to account any losses the Trust may
have suffered as a result of the July 2013 refinancing.
7 Grant v New Zealand Motor Corporation [1989] 1 NZLR 8 (CA): the essential requirements for such a set-off are that the defendant’s cross-claim must so affect the plaintiff ’s claim that it would be unjust to allow the plaintiff to have judgment without bringing the cross-claim to account. The link must be such that the two are in effect interdependent; that judgment on one cannot fairly be given without regard to the other. The defendant’s cross-claim must call into question or impeach the plaintiff ’s claim, but it is not essential that claim and cross-claim arise out of the same contract (at 12).
[73] In reaching that finding I bear in mind that if the group’s contentions relating to the July 2013 refinancing are upheld at the trial, the monthly instalments withheld by the group for approximately five months in 2014 appears to have had the effect that, by September 2014, the group had substantially recouped what it says it “overpaid” in 2013 and the early part of 2014 on the facilities which were affected by the July 2013 refinancing. I also take into account the fact that the overpayments (if that is what they were) arose in large part because the Trust and the other members of the group failed to properly monitor the monthly instalments they were paying to the Bank. Even allowing for the disruption caused by the earthquake which occurred in mid-2013, the defendants should have picked up long before December 2013 that the monthly instalments they were paying to the Bank were substantially higher than they had expected. A further point is that if the monthly instalments payable under the loans which were refinanced in July 2013 did wrongly include payments of principal, there was a corresponding benefit to the group in reducing their indebtedness to the Bank.
[74] The group’s case of loss caused by the July 2013 refinancing is substantially built on the premise that the cashflow impact of the larger monthly instalments put it in a position where it could not meet its obligations to the Bank. But there has been insufficient evidence put forward by the group to show that it has any arguable defence to the claim on the First Housing Loan based on cashflow impact. There is nothing specific explaining how the higher monthly instalments impacted on the Trust. I think in the circumstances of this case, where there is evidence that the group’s cashflow difficulties arose in substantial part from the strict terms apparently imposed by its other major lender, and the group fashioned its own “remedy” by withholding payments to the Bank in 2014, it was incumbent on the group to put forward at least some evidence on which the Court could find it arguable that any breaches by the Bank associated with the July 2013 refinancing caused the Trust losses which exceeded not only the total of the withheld instalments but also the full amount of the Property Plus loan and interest thereon. (The Property Plus loan is directly affected by the group’s allegations arising out of the July 2013 refinancing, and if the Trust had an entitlement to set off any financial claims for misrepresentation, mistake, non est factum, or breach of the FTA arising out of the July 2013 events, set-off would presumably be applied first against the claim of the
Bank which is directly implicated by the allegations, namely the claim for recovery of the Property Plus loan and interest thereon).
[75] The Bank’s claim for principal and interest on the Property Plus loan now exceed $1.5 million, and in circumstances where the group apparently believed they could recoup their alleged losses arising out of the July 2013 refinancing by withholding a little over $200,000 in instalments falling due between June and October 2014, it seems improbable that the Trust could have sustained losses arising out of the July 2013 refinancing which exceeded that amount by something in excess of $1.35 million (the principal amount claimed on the Property Plus loan). In any event, it was for the Trust to put forward an evidential basis for a claim of that sort, and in my view it has not done so. In those circumstances, the Trust and its guarantors have not shown that they have an arguable case that there are or may be losses arising out of the July 2013 refinancing which the Trust is entitled to set off against its liability to the Bank under the First Housing Loan.
[76] The next issue is the defendants’ contention that they had a reasonable expectation that the smaller loan which expired on 7 September 2014 (which provided the basis for the notices under the Act accelerating the Trust’s liability under the First Housing Loan) would be rolled over.
[77] I will deal with this argument briefly. Mr Garnham’s relationship with the Bank over many years was not sufficient on its own to have entitled him or Mr Spackman to expect that the Bank would not enforce its rights on expiry of a loan, and the group have produced no evidence that the expiry of the smaller loan on
7 September 2014 was preceded by any promise or indication from the Bank that repayment would not be required on due date.
[78] The group declined the Bank’s offer made on 28 July 2014 to restructure the group facilities, and when (on 21 August 2014) the Bank rejected the counter- proposal put forward by Mr Garnham on 15 August 2015 it should have been clear that the Bank expected repayment of the loans which were due to be repaid on
7 September 2014. The Bank’s position was made clear in its 21 August 2014 letter, where the Bank said that the alternative options for the group were “refinance and/or
re-sale of assets sufficient to fully repay the outstanding Bank indebtedness”. Whatever might have been the case earlier, that advice made it clear to Mr Garnham that he could not reasonably have any expectation from that point on that the facilities falling due for repayment would be rolled over. He was invited to put forward alternative proposals to the Bank by 7 September 2014, but he did not do so.
[79] For those reasons I do not consider the “reasonable expectation of rollover” defence to be arguable. Insofar as it relates to the Bank’s claim for the balance owing under the First Housing Loan, it is accordingly rejected.
[80] Turning to Mr Spackman’s position, the Bank accepts that his liability is limited to the value of the assets of the Trust which are available from time to time to meet his liability.8 The evidence shows that the Trust is the registered proprietor of the Seatoun properties over which the First Housing Loan is secured, and Mr Garnham has produced a copy of a letter dated 19 March 2015 in which he advised the Bank that the Seatoun properties had recently been valued at $2.65 million.
[81] On the face of it, it appears that there will be no room for the operation of the limitation provisions to reduce Mr Spackman’s liability to any figure below the full amount of principal and interest owing on the First Housing Loan. But I accept that the intention of the parties was that Mr Spackman should have no personal liability extending beyond the assets of the Trust from time to time, and I think the words which I have italicised show that he should not be taken to have effectively guaranteed for the future that the Trust assets would have any particular minimum value. If the total values of the Trust assets were to fall below the amount owing to the Bank on the First Housing Loan at the time Mr Spackman was required to make payment, he could not in my view be liable for any amount exceeding the value of the assets. Accordingly I will follow the approach adopted by Venning J in
Official Assignee v Wheeler,9 and direct that any enforcement of the judgment to be
entered against Mr Spackman as trustee of the Trust is to be limited to the extent of the assets held by him as trustee of the Trust.
8 Clause 42.2 of the Bank’s forms of memorandum of mortgage registered over the Seatoun properties.
9 Official Assignee v Wheeler [2015] NZHC 1644 at [51].
[82] For all of the foregoing reasons, I conclude that the Bank is entitled to judgment against Mr Spackman as trustee of the Trust (limited in the manner just described), and against Mr Garnham, Prime, and BBHL as guarantors of the Trust’s liability, for the amount owing under the First Housing Loan and interest. In accordance with counsel’s updated memorandum dated 24 March 2016, the balance owing under the First Housing Loan on 24 March 2016 was $1,264,025.89, together with interest on that sum at the rate of 8.74 per cent per annum from 28 May 2015 to the date of judgment. Calculated to the date of this judgment, the amount of interest owing on the First Housing Loan is $111,382.56.
(ii) The Property Plus loan
[83] The Bank’s claim for the balance of the Property Plus loan is affected by the group’s claims of misrepresentation, non est factum, mistake and misleading and deceptive conduct under the FTA.
[84] The particular remedies sought in respect of each of these defences are not specified in the statement of defence. Nor were they addressed in submissions.
[85] The Bank’s position is that it was entitled to call up all of the facilities on which it seeks judgment on the basis of defaults on facilities unaffected by the July
2013 refinancing. It takes that position notwithstanding that the Property Plus loan is one of the facilities which is affected by the group’s claims arising out of the July 2013 refinancing. The Bank submits that even if those causes of action are reasonably arguable it is still entitled to summary judgment.
[86] The difficulty with that submission is that the effect of the Bank’s concession that the alleged wrongs associated with the July 2013 refinancing are reasonably arguable raises the question of what remedies would be available if the group were to succeed in establishing any of those wrongs at trial.
[87] The remedies which are potentially available in respect of the pleaded affirmative defences vary.
[88] Depending on the facts, misrepresentation may result in damages or cancellation of the contract.10
[89] Mistake established under the Contractual Mistakes Act 1977 can give rise a range of remedies. Section 7 of that Act materially provides:
7 Nature of relief
…
(2) The extent to which the party seeking relief, or the party through or under whom relief is sought, as the case may require, caused the mistake shall be one of the considerations to be taken into account by the court in deciding whether to grant relief under this section.
(3) The court shall have a discretion to make such order as it thinks just and in particular, but not in limitation, it may do 1 or more of the following things:
(a) declare the contract to be valid and subsisting in whole or in part or for any particular purpose:
(b) cancel the contract:
(c) grant relief by way of variation of the contract:
(d) grant relief by way of restitution or compensation.
…
(6) Any order made under this section, or any provision of any such order, may be made upon and subject to such terms and conditions as the court thinks fit.
[90] A successful plea of non est factum renders the contract in question void.11
[91] And under the Fair Trading Act, one potential outcome is that the refinancing contract could be declared void ab initio.12
[92] I am not suggesting that any of those outcomes is either likely or unlikely.
The point is that the Bank’s concession has opened the door to these defences being run at trial, and neither party has addressed in submissions the issue of what
10 Contractual Remedies Act 1979, ss 6 and 7.
11 Bradley West Solicitors Nominee Co Ltd v Keeman [1994] 2 NZLR 111 at 120, per Tipping J.
12 Fair Trading Act 1986, s 43(3)(a)(i); Dungey v ANZ Banking Group (NZ) Ltd [1997] NZFLR
404, (1997) NZBLC 102 (HC).
remedies might be available to the group if it establishes at trial one or more of its affirmative defences. In those circumstances I do not consider that the claim for recovery of the Property Plus loan and interest thereon is suitable for determination on the Bank’s summary judgment application.
[93] In those circumstances, it is not necessary for me to address the defence (pleaded by the group in their notice of opposition) based on alleged failure by the Bank to satisfy its disclosure obligations in respect of the Property Plus loan under the Credit Contracts and Consumer Finance Act 2003.
The claim against BBHL
[94] The amount claimed from BBHL, which was guaranteed by Mr Garnham, the Trust and Prime, is the balance of the facility described as the Second Ballantyne Loan facility. The amount claimed is $827,632.62 together with interest at the rate of 12.29 per cent per annum from 28 May 2015 to the date of judgment.
[95] Again, this claim is affected by the group’s affirmative defences of misrepresentation, mistake, non est factum and breach of the FTA. For the reasons set out above in respect of the Property Plus loan, this claim is not suitable for determination on a summary judgment application. The Bank’s concession that the defences are not suitable for resolution by summary judgment, coupled with the fact that the parties did not address potential remedies, means that these claims will have to go forward to trial
The Bank’s claim for possession of the Seatoun properties
[96] I accept Mr Gordon’s submissions on this issue.
[97] I have found that the Bank is entitled to judgment for the principal and interest owing under the First Housing Loan, and the First Housing Loan is secured over the Seatoun properties. With that finding, there is no dispute that the Bank as mortgagee has become entitled to exercise a power to enter into possession of the Seatoun properties. Under s 137(1)(c) of the Act, a mortgagee who is so entitled is entitled to apply to the Court for an order for possession of the mortgaged land.
[98] Mr Gordon submits that it is difficult to properly market a property for a mortgagee sale, and achieve the best price, when it is occupied by a mortgagor who is unwilling to co-operate with the mortgagee’s marketing efforts. In this case, the Bank has written to Mr Garnham requesting confirmation that he will co-operate with the Bank by allowing the Bank’s valuer and/or real estate agents access to the Seatoun properties, but the Bank’s requests have been ignored. The Bank says it has no reason to believe Mr Garnham will co-operate during the process of a mortgagee sale of the Seatoun properties, and for that reason an order for vacant possession is necessary.
[99] Mr Sumner opposed the application for an order for vacant possession of the Seatoun properties on the basis that, as the group have arguable defences to the Bank’s claims, the Bank is at this stage not entitled under its mortgage to exercise its power to enter into possession.
[100] But the Bank has succeeded on a substantial part of its claim, and in my view its case for a vacant possession order is compelling. There will be an order for vacant possession of the Seatoun properties, effective immediately on the expiry of the period of 25 working days after the date of this judgment.
Claim for a declaration that interest is payable at the contract rate after the judgment
[101] In its statement of claim, the Bank asks for a declaration that interest continues to accrue at the rate of 8.74 per cent per annum from the date of judgment up to the date of payment.
[102] The usual position is that a plaintiff’s claim for interest merges in the judgment it obtains. After judgment, the judgment creditor can normally only recover interest on the judgment at the rate prescribed under s 87 of the Judicature Act 1908.13 But if a provision in a contract expressly entitles a party to interest at a contract rate from the date of judgment until actual payment, then that provision will
be enforced unless to do so would be unconscionable.14 A plaintiff who has the
13 Westpac New Zealand Ltd v Wright (2010) 20 PRNZ 786 (HC) at [6]-[8].
14 IFC Securities Ltd (in rec) v Sewell [1990] 1 NZLR 177 (HC) at 184.
benefit of such a clause is entitled not to judgment for the amount of the post- judgment interest, but to a declaration that the defendant is liable for ongoing interest at the contract rate.
[103] The parties’ agreement as to post-judgment interest must clearly exclude the doctrine of merger, and in a summary judgment application the evidence must refer to the clause relied upon. The contract in which the clause appears must be produced as an exhibit, and the plaintiff must plead the contractual terms relied on and seek separate relief for interest arising after judgment.15
[104] In this case, it is not entirely clear that the Bank is seeking summary judgment for the declaration which is sought in its statement of claim. The application for summary judgment asks only that judgment be entered for the Bank on the principal sum claimed on each of the Bank’s causes of action, “together with interest thereon and costs”. It does not specifically refer to the claim for a declaration which is pleaded in the statement of claim.
[105] But even if the application for summary judgment is to be read as including a claim for a declaration in respect of post-judgment interest, I am not satisfied that such a declaration should be made on the pleadings and evidence which has so far been provided.
[106] The Bank’s statement of claim does not appear to identify a particular clause in the First Housing Loan which would oust the normal rule that interest merges in the judgment. There is a pleading that, in event of default, the contract terms entitled the Bank to charge interest on a daily basis on the overdue amount calculated from the date that amount became due until the date of actual payment but in my view it is not sufficiently clear from that pleading that the clause relied upon was intended to have effect post-judgment.
[107] Mr Willdig produced a copy of the Letter of Advice – Housing Term Loan setting out the main terms of the First Housing Loan. This document contains the
15 Westpac New Zealand Ltd v Wright, above n 13, at [23]-[24] applied in ANZ Bank New Zealand
Ltd v Unka & Ors [2014] NZHC 1320 at [128].
same provision as that pleaded in the statement of claim. It is silent on the question of ouster of the ordinary principle that a claim for contractual interest will merge in the judgment. The Bank pleads in its statement of claim that all of the terms of its Facility Master agreement were incorporated in the First Housing Loan, but that document does not appear to have been produced, and I am unable to say that it contains a provision which clearly states that the borrower is to be liable for interest at the contract rate post-judgment.
[108] In the foregoing circumstances I am not prepared to enter summary judgment for the declaration relating to interest sought in the statement of claim.
The post-hearing memoranda filed by counsel
[109] With the agreement of the group, Mr Gordon filed a memorandum dated 24
March 2016 updating the Court on the amounts claimed by the Bank following the sale of the Takaka property.
[110] Mr Sumner then filed a memorandum dated 1 April 2016 in which he advised that the group accepts that Mr Gordon’s 24 March 2016 memorandum correctly set out the proceeds from the sale of the Takaka property, and how those proceeds were allocated to specific loan accounts (the allocation was made in accordance with a request the defendants made to the Bank at settlement). But Mr Sumner submitted that the group do not agree with the Bank’s conclusions on the balance which is said to remain owing. He raised issues over the Bank’s charges for interest, fees, and other deductions made on the 15 individual loan accounts for the period from early
2013. He stated that the Bank had declined to provide details of its calculation of those claim, with the result that the group had had no opportunity to precisely determine which charges and accounting they accept and which they dispute.
[111] In a reply memorandum dated 12 April 2016, Mr Gordon objected to the filing of Mr Sumner’s memorandum. He submitted that it was too late for the group to raise what are in effect additional defences relating to the quantum of the Bank’s claim. He drew attention to this Court’s Practice Note, which requires that post- hearing submissions may only be made with the leave of the Judge, which will only
be granted in exceptional circumstances. No submissions are to be filed before that leave is given.16
[112] I accept Mr Gordon’s submissions on this issue. If the group wished to raise issues over the Bank’s entitlement to claim interest or fees, or to make other deductions, those issues should have been clearly pleaded in the group’s notice of opposition, and should have been raised in the written submissions filed before the hearing. If that had been done, the Bank would have at least have had the opportunity to address any matters of concern by way of affidavits and/or submissions.
[113] I accordingly decline to consider the arguments over quantum belatedly
raised by the group in their counsel’s memorandum dated 1 April 2016.
Costs
[114] The Bank seeks indemnity costs against the group under r 14.6(4)(e). It substantially relies on its written submissions on costs which were made following the delivery of my judgment of 23 November 2015 on the group’s interlocutory applications.17
[115] In those written submissions, Mr Gordon had noted that, under r 14.6(4)(e), the Court may order a party to pay indemnity costs if the party claiming costs is entitled to indemnity under a contract or deed. He referred to ANZ Banking Group (NZ) Ltd v Gibson, in which the ANZ Bank had relied on such a costs recovery
clause.18 The Court of Appeal held that the contractual obligation to pay actual costs
was enforceable unless contrary to public policy. Richardson J stated that he was unable to see how the contractual arrangement in the case could be said to impede the administration of justice, or otherwise be contrary to any discernible public
policy considerations. His Honour asked rhetorically why a lender should be out of
16 Practice Note [1968] NZLR 608.
17 Bank of New Zealand v Garnham, above n 2.
18 ANZ Banking Group (NZ) Ltd v Gibson [1986] 1 NZLR 556 (CA) at 566.
pocket as a result of a failure to pay when the parties have expressly provided that the lender should be indemnified in the event of default by the borrower.19
[116] In his submissions on costs on the group’s interlocutory applications, Mr Sumner submitted that costs should be reserved. He further submitted that indemnity costs were not appropriate.
[117] By Minute dated 27 January 2016 I reserved the issue of costs on the group’s interlocutory applications for consideration following the hearing of the Bank’s application for summary judgment.
[118] In this case, the Bank has pleaded in its statement of claim that the First Housing Loan (including the Facility Master Agreement) contained a clause stating that:
If the Bank makes demand for repayment of any amount outstanding, the borrower must pay, amongst other things, any costs (including in connection with legal and other advisors) incurred by the Bank in recovering the amount outstanding (clause 8.12 of the Facility Master Agreement).
[119] That pleading was admitted by the group in their statement of defence.
[120] On the face of it, then, the Bank appears to be entitled to full solicitor/client costs, subject only to the questions of whether the costs claimed are reasonable, and whether there should be any deduction on account of the Bank’s failure to obtain summary judgment on two of its three remaining claims.
[121] However I think the parties’ should have the opportunity to file supplementary submissions on costs in light of the findings I have made in this judgment. I direct that the Bank is to file a further memorandum setting out its updated claim for costs, within 15 working days of the date of this judgment. The group may file a memorandum in reply within 15 working days after their receipt of
the Bank’s memorandum.
19 At 566.
Summary of orders
(1)On the Bank’s claim for summary judgment against Mr Spackman in his capacity as a trustee of the Trust, and against Mr Garnham, BBHL and Prime as guarantors of the Trust’s liability to the Bank, I enter summary judgment for the Bank in the sum of $1,264,025.89, being the balance owing under the First Housing Loan on 24 March 2016, together with the sum of $111,382.56 being interest on that sum at the rate of 8.74 per cent per annum calculated from 28 May 2015 down to the date of this judgment. Mr Spackman, Mr Garnham, BBHL, and Prime are to be jointly and severally liable to the Bank for those sums, provided that any enforcement of the judgment against Mr Spackman in his capacity as trustee of the Trust is limited to the extent of the assets held by him as trustee of the Trust.
(2)The application for summary judgment against Sams Bay on the cause of action based on the First Housing Loan is adjourned. The Bank is to file and serve (including on Sams Bay’s liquidator) a memorandum within 15 working days of the date of this judgment, advising whether (and if so on what basis) it seeks to prosecute the summary judgment application against Sams Bay. On receipt of any such memorandum I will give such further directions as may then be appropriate.
(3)I make an order under s 137(1)(c) of the Act that Mr Spackman in his capacity as trustee of the Trust, and Mr Garnham and any other occupants of the Seatoun properties, must provide vacant possession of the Seatoun properties (being the properties owned by the Trust at 5 and 7 Ludlam Street, Seatoun, Wellington) to the Bank, forthwith on the expiration of 25 working days after service of these orders on Mr Spackman and Mr Garnham. I direct that service may be effected at the address for service given by Mr Garnham and Mr Spackman in this proceeding.
(4) The Bank’s application for summary judgment on its remaining
causes of action is dismissed.
(5)The Bank may file a memorandum on costs within 15 working days of the date of this judgment. The group may file a memorandum on
costs within 15 days of their receipt of the Bank’s memorandum.
Solicitors:
Minter Ellison Rudd Watts, Wellington for the plaintiff
Ford Sumner, Wellington for the defendants
Associate Judge Smith
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