General Finance Limited v Serepisos - [2018] NZHC 541

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE

CIV 2016-485-835

[2018] NZHC 541

BETWEEN
GENERAL FINANCE LIMITED

Plaintiff

AND

ALLIKI SEREPISOS

Defendant

Hearing: 5 March 2018

Counsel:

S O McAnally for Plaintiff J C La Hatte for Defendant

Judgment:

26 March 2018

JUDGMENT OF ELLIS J

[1] On 13 April 2017, Associate Judge Smith entered summary judgment in favour of General Finance Limited (GFL) and against Mrs Serepisos in the sum of $50,000.1 That $50,000 represented part of a total claim for $294,667.59, being what was then the outstanding amount of Mrs Serepisos’ debt to GFL, together with interest and costs, after a mortgagee sale of an apartment owned by her.

[2] The Associate Judge did not grant summary judgment in the full amount because he had formed the view that Mrs Serepisos had an arguable defence or counterclaim, namely that GFL had failed to discharge its duty under s 176 of the Property Law Act 2007 (the PLA) to take reasonable care to obtain the best price reasonably obtainable when it sold the apartment, and that it had unjustifiably delayed in selling the property.² The $50,000 for which summary judgment was entered was based

1 General Finance Ltd v Serepisos [2017] NZHC 749.
2 At [94].

GENERAL FINANCE LTD v SEREPISOS [2018] NZHC 541 [26 March 2018]

on the Associate Judge’s calculation of the amount that would still have been owing even if Mrs Serepisos succeeded in establishing a PLA breach at trial.³

[3] The trial on the remaining issues was scheduled to be heard by me on 5 and 6 March 2017.

Background

[4] The general factual outline which follows is largely taken from Associate Judge Smith’s judgment.

The loan agreements and Mrs Serepisos’ defaults

[5] On 5 February 2014, GFL entered into a term loan agreement for $412,030 with Mrs Serepisos. That sum comprised a $400,000 loan, $12,000 in legal fees and a $30 fee for loan documentation. On 16 May 2014, there was a further advance of $62,200. The total amount of the advance ($474 ,230) was repayable on 5 February 2015. The advances were secured by a first ranking mortgage over a property owned by Mrs Serepisos, namely unit 30/30 Tory Street, Wellington.

[6] Attached to the mortgage proposal that was signed by Mrs Serepisos was a declaration. This declaration was also signed be her and stated:

For the benefit of the creditor, the debtor declares, pursuant to s 14 of the Credit Contracts and Consumer Finance Act 2003, that the credit to be provided to the debtor, by the creditor, under the credit contract to be entered into, is to be used by the debtor primarily for business of investment purposes (or for both purposes).

The Debtor/Borrower confirms He/She has read the above declaration.

IMPORTANT

You should not sign this declaration unless the loan is primarily for business of investment purposes

[7] The loans provided for interest 21.45 per cent (reduced…

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: [2018] NZHC 541
Decision Date: 26 March 2018

CaseChat Overview and Summary

In General Finance Limited v Serepisos, the court was required to decide whether General Finance Limited (GFL) had breached its duty under section 176 of the Property Law Act 2007 (PLA) to take reasonable care to obtain the best price reasonably obtainable when it sold the apartment owned by Mrs Serepisos. The court was also required to determine whether GFL had unjustifiably delayed in selling the property. The court had to consider the evidence presented by both parties and determine whether Mrs Serepisos had established a breach of section 176 and, if so, what consequences that might have for the debt she owes. The court also had to address the ancillary issue of the sale of Mrs Serepisos' chattels.

The court found that Mrs Serepisos had not established a breach of section 176 of the PLA. The court found that the evidence strongly supported the conclusion that GFL did not have, and could not have had, knowledge of the potential purchaser, Mr Chin, prior to the unconditional sale of the property on 3 May 2016. The court held that it was not unreasonable for GFL to accept an unconditional offer for a price consistent with all other known interest in the property, on the chance that a better offer might come along. The court also found that Mrs Serepisos had not suffered any loss from the alleged sale of her chattels, but had instead benefited from it through a reduction of her indebtedness.

The court held that GFL had proved its claim and was entitled to judgment in the sum of $332,284.88, together with costs on a 2B basis. The court dismissed Mrs Serepisos' remaining defences and counterclaims.

Orders