Hong Kong and Shanghai Banking Corporation Limited v Howe

[2012] NZHC 2066

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-0419 [2012] NZHC 2066

BETWEEN  THE HONG KONG AND SHANGHAI BANKING CORPORATION LIMITED Plaintiff

ANDBETSY-ANN HOWE First Defendant

ANDCHRISTOPHER SIMON HOWE Second Defendant

Hearing:         15 May 2012

Appearances: Ms Chamberlain for Plaintiff

Ms Halloran for Defendant

Judgment:      21 August 2012

JUDGMENT OF ASSOCIATE JUDGE DOOGUE

This judgment was delivered by me on

21.08.12 at 4.30 pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Counsel:

MinterEllisonRuddWatts, P O Box 3798, Auckland – [email protected]
Chris Patterson Barristers, 36 Kitchener Street, Auckland – [email protected]

THE HONG KONG AND SHANGHAI BANKING CORPORATION LIMITED V HOWE & ANOR HC AK CIV-2012-404-0419 [21 August 2012]

Background

[1]      The  second  defendant  was  the  director  of  a  company  called  Howe Investments Limited (“the Company”).  On 27 June 2001 the plaintiff entered into a overdraft loan agreement with the plaintiff under which the plaintiff made available to the company an overdraft facility up to $30,000.  The second defendant as director of the company executed the agreement.   The first and second defendants entered into a guarantee and indemnity agreement which I shall mention subsequently.  The limit of the account was $30,000 and it was an interest only type of loan.   Two passages from the agreement should be set out verbatim.   The first provided as follows:

Repayment shall be upon demand the manager or other authorised officer of the Bank may, from time to time, require the outstanding amount being principal, interest and all charges to be repaid in full on demand or to be reduced by regular instalments of such amounts and at such intervals as may be notified to [the customers]

................

Notwithstanding that this facility is payable on demand, subject to annual review, with the first review due on 30 June 2002 and annually thereafter. [sic].

[2]      In late 2001 Mr Howe the second defendant informed one of the plaintiff’s employees, Mr Tonks, that he was planning to move to Australia and he made enquiries about opening accounts with the plaintiff in Australia.

[3]      In October 2001 the defendant moved to Australia.

[4]      The second defendant makes the further statement in his affidavit

12.Prior to leaving New Zealand my wife and I attended to all our financial affairs in New Zealand, including accounts which we held with the plaintiff,.  At that time I provided the plaintiff by way of letter with my intended residential address in Sydney together with the new companies (sic) Postal address, this being Post Office Box

622 Double Bay NSW 1360, this address being maintained as the postal address of Howe Architects Pty Ltd... from that date to the

present.

[5]      For   the   plaintiff,   Mr   Tonks   denies   that   he   received   any   letter   or communication from the defendants containing their new personal contact details in Australia.

[6]      Mr Howe said in his affidavit that he believed that the overdraft account was closed when he opened bank accounts with HSBC Australia.  Mr Tonks says that he was never told this and he pointed out that Mr Howe said he would be arranging for New Zealand clients to lodge funds into the New Zealand account in future when he wrote the letter of 7 February 2002.

[7]      Mr Howe further alleges that in or about October 2001 it provided Mr Tonks with a letter recording his intended residential address in Sydney together with the postal  addresses  of  new  companies  that  he  intended  to  incorporate  in  NSW. Mr Tonks says that he did not receive any communication about their new contact details.

[8]      Later that year Mr Tonks introduced the second defendant to a sister bank’s

office in Sydney.

[9]      On 7 February 2002 Mr Howe wrote to the plaintiff, attention Mr Tonks in the following terms:

Dear Glen

Trust things are going well for you in 2002.

Thanks for the referral re opening accounts with HSBC Premier in Sydney.

I sent in the applications today (they were a little slow in sending out the application forms) so should have the accounts open soon, I asked Deborah Waters to contact you if she needs any history/reference.

Betsy and I are also opening a private Premier Account, and will be transferring some of our funds from Westpac Private Banking Auckland once the account is operational.

Please find some outstanding cheques for deposit into the account directly in future.

I am arranging for NZ clients to deposit the funds into the account directly in future.

Things are going well here, if a third of the projects we are bidding on come we will have more design work here than several years’ worth in NZ (bit of a worry really). Will catch up with you when next in Auckland.

Regards, Chris Howe

[10]     There is no dispute that this letter related to the overdraft account which is the subject of these proceedings.

[11]     On 15 November 2002 the company was struck-off, presumably for non-

compliance with obligations under the Company’s Act 1993.

[12]     On 8 April 2003 the plaintiff made a change to the records for the company which thereafter was described as “address unknown”.

[13]     The plaintiff says it never received any instructions to close the account and, remarkably, over a period of some 11 years the account stayed open until the point was reached where the account limit was exceeded and that apparently triggered action on the part of the plaintiff to get in touch with the defendants.  The account debit balance slowly rose over this period as a result of cheques which were drawn on the account (approximately $7,000) and by meeting an automatic payment which the company had set in place.  But the bulk of the debit entries were for bank fees and interest charges.

[14]     The address which the bank had for the company was a post office box at St Heliers, Auckland.  The second defendant says that being of the view that there was no further requirement for the post office box he allowed it to lapse in 2002.

Factual matters in dispute

[15]      Most factual matters are not in contention but there are some which need to be addressed.

[16] The first issue is whether Mr Howe actually did send the letter that I referred to at [9] above. I regard it as relevant that no date is provided for when this letter

was sent.  It is also relevant that the bank denies receiving it.  As well it is persuasive that no copy of the letter has been found located either in the receivers records or the senders records.   For those reasons I consider that this evidence belongs to  the limited category which the Court is able to reject even in summary judgment stage on  the  basis  of  the  vagueness,  lack  of  specificity and  inconsistency  with  other established facts in the case (that is the non-location of the letter).

[17]     I also agree with counsel for the plaintiff, Ms Nikki Chamberlain that any assertion that the company closed its account would be quite inconsistent with the terms of the letter that the second defendant wrote to Mr Tonks on 7 February 2002 which I have set out above.  I also agree that that letter gave every indication that the company would be maintaining its account with the plaintiff.

[18]     The further point of dispute concerned an assertion that Mr Howe made that before he left New Zealand he gave to the bank, amongst other things, a post office box in Sydney for his architectural practice.  I understand that this is the basis for an assertion that the bank ought to have sent bank statements to the Sydney address from that time.  This would seem to have been in 2001.

[19]     Mr Howe also says that when he wrote to the bank 7 February 2002 advising that he and his wife were going to be opening personal accounts at the Sydney HSBC, he did so was on letterhead that set out his Sydney address.   There is no argument that the Sydney address was included in this communication.   However what is in dispute is the further submission that the bank ought to have understood that  from  that  point forward, at  the latest,  bank  statements  ought  to have been referred to the Sydney address.  It is difficult to understand why the bank ought to have understood that even though Mr Howe was not giving an express direction to change the address for the New Zealand account to the Sydney address, as he could quite easily have done, nonetheless that was his intention.

[20]     The next issue concerns the cheques that were drawn on the account.   The second defendant has deposed that while the signatures on the cheques appear to be his he has no recollection of writing the cheques, is unable to identify the payees and

has no records to confirm whether or not the amounts paid were obligations of the company.

[21]     On the basis of such evidence, I do not consider that it is open to the Court, even on a summary judgment basis, to treat it as being an arguable question that the cheques  were  written  out  by an  unauthorised  person  who  operated  the  account fraudulently.    Further,  the  pattern  of  usage  of  the  account  with  sporadic  small amounts would not seem to be consistent with an attempt by some person to enrich themselves by fraudulent operation of the account.   There is no indication that an investigation has ever been initiated following a complaint that an unauthorised person operated the account of the company.  I therefore conclude that the cheques on the account were written out by the second defendant with the authority of the company of which he was a director.

[22]     There is a further significance to the point about the cheques being written out.  The defendant says that he had no reason to believe that there was any liability owing to HSBC in relation to the company, and that he believed that he had ensured that all matters in relation to the company account with HSBC had been dealt with before it was struck off, and ceased to exist.  Because the company was struck off 15

November 2002, that averment is inconsistent with the fact that the defendant wrote cheques on the companies account as late as July 2003.

[23]     The net result was that the second defendant the director of the company took no steps to close the account and by neglecting to renew the post office box effectively cancelled the address which the bank had been given to send statements and other communications to.  It seems to me that a reasonable inference can also be drawn that the move by the bank to change the status of the account to “address unknown” probably followed the return of communications sent to the box number after the box number lapsed in 2002.

[24]   The bank has issued proceedings against the defendants to recover the outstanding balance in the company account.  It claims that as at 6 January 2012 the sum of $32,994.83 was due and owing under the overdraft agreement and it seeks that sum together with interest and indemnity costs.   By their amended notice of opposition dated 19 April 2012 the defendants say that they left New Zealand in October 2001 and that the applicant was given notice of this move and notice of the respondents’ contact details at the time and that no attempts were made to contact the defendants or to provide any information in relation the bank account for 10 years after their departure.

[25]     The defendants say that:

1.The applicant was in contractual breach by failing to review the account annually;

2.The applicant breached an implied term of the contract being the practice recorded in the banking code of practice to which the plaintiff agreed to apply by failing to endeavour to ensure the customer information it held was accurate;

3.The  plaintiff  breached  the  duty  of  care  it  owed  to  the defendants by failing to “use the standard of care which banks might reasonably expect it to take according to the ordinary practice of bankers”.

4.The applicant has not made demand in accordance with the contract.

[26]     Before I consider these defences in detail I shall give brief consideration to the principles that apply when the Court is considering a summary judgment application.

[27]     I intend  to  be  guided  by the  following  summary of  the  legal  principles applicable to summary judgment applications which was part of the judgment of the the Court of Appeal in Krukziener v Hanover Finance Limited:1

a)      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.2

b)The onus is on the plaintiff, but where the plaintiff’s evidence is sufficient to show that there is no defence, the defendant will have to respond if the application is to be defeated.3

c)       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.4

d)       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.5

1      Krukziener v Hanover Finance Limited [2008] NZCA 187; (2008) 19 PRNZ 162 at [26].

2      Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.

3      MacLean v Stewart (1997) 11 PRNZ 66 (CA) at 69.

4      Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341.

5      Bilbie Dymock Corp Limited v Patel (1987) 1 PRNZ 84 (CA) at 86.

Submission that it was an express requirement that the bank would review the customers’ account annually

[28]     It was the defendants’ argument that in breach of its obligations under the term loan agreement, HSBC failed to review the account annually.  The submissions for the defendants under this head of defence were as follows:

20.      It was an express term of the Overdraft Loan Agreement dated 27

June 2011 (“the Agreement”) that the Overdraft account was to be reviewed annually.

21.This clause is found on the second page of the Agreement, the sole clause in the Other Terms of Contract section:

“Notwithstanding that this facility is repayable on demand, subject to annual review, with the first review due on 30 June 2002 and annually thereafter”.

22.On a plain reading of the clause, HSBC was required to review the overdraft facility on 30 June of each year (“the annual review”).

23.      Mr Tonks of HSBC admits that this did not occur.

24.HSBC was in breach of contract by failing to review the Overdraft account pursuant to the Overdraft Loan Agreement dated 27 June

2011 (“the Agreement”).

[29]     The argument for the defendants is that had the plaintiff carried out an annual “review” it would have noted that the address of the defendants was in Australia. Consequentially, it is argued, the bank would have contacted the defendants at their Australian address to advise them of the continuing activity on the bank account and the claim that they now face would have been averted.  I assume that the argument is that the defendants had other resources which they would have been able to use to pay back what was owed to the bank and if they had done that they would not have faced the additional fees and interest that have accumulated over an 11 year period approximately.

[30]     The plaintiff submitted to me that the provision in question did not amount to insurance that a review of the addresses on the files would be carried out.   The plaintiff’s position was that in any event the provision was inserted for its sole benefit and it waived reliance upon that provision.

[31]     I do not, with  respect,  consider that  considerations of whose benefit the clause was inserted for need to be gone into.  If the provision does not mean what the defendants say it does, then that is an end to the enquiry.

[32]     In my view the provision, although not very clearly drafted, makes it clear that while the account is on demand, the bank will be entitled to review the position annually.  The intention of the clause was in effect to agree that the bank in principle agreed to continue to provide overdraft accommodation on a year by year basis but reserved to itself the right to end the arrangement (by making demand) at any time. That is the common sense meaning of the provision.  Such an interpretation accords

with the principle stated in Vector Gas Limited v Bay of Plenty Energy Limited:6

The ultimate objective in a contract interpretation dispute is to establish the meaning the parties intended their words to bear.  In order to be admissible, extrinsic evidence must be relevant to that question.  The language used by the parties, appropriately interpreted, is the only source of their intended meaning.  As a matter of policy, our law has always required interpretation issues to be addressed on an objective basis.  The necessary inquiry therefore concerns  what  a  reasonable  and  properly  informed  third  party  would consider the parties intended the words of their contract to mean.  The court embodies that person.  To be properly informed the court must be aware of the commercial or other context in which the contract was made and of all the facts and circumstances known to and likely to be operating on the parties’ mind. Evidence is not relevant if it does no more than tend to prove what an individual party subjectively intended or understood their words to mean, or what their negotiating stance was at a particular time.

[33]     The provision was not inserted to ensure that our bank employees should take steps to check each year to ensure that the address which the customer had provided remained current.

[34]     This ground of defence does not therefore help the defendants.

Implied term

[35]     Ms A M Halloran counsel for the defendant referred me to the provision of the Code Of Banking Practice, Fourth Edition July 2007.  It was not disputed that the plaintiff  has  agreed  to  adopt  the  standards  set  out  in  the  code.    Ms  Halloran

particularly drew my attention to the bank’s commitment to “endeavour to ensure

6 Vector Gas Limited v Bay of Plenty Energy Limited, [2010] NZSC 5; [2010] 2 NZLR 577 at [19].

that your information that we hold is accurate”.7    It was said that it was an implied term of the contract that the bank would comply with that undertaking in its dealings with the defendants but it had not.

[36]     However there is another part of the code which states:

(d)      You are responsible for informing us of any change of your name or address.8

[37]     It was the case for the defendants that the address in New South Wales had been provided to the bank when Mr Howe wrote his letter on 7 February 2002. Ms Chamberlain took the position that, assuming the letter was sent, the bank could not reasonably have been expected to note a change of address for the company to New South Wales where the defendants were residing from 2001 onwards.   She agreed that while the letter might have included addresses of branch offices of his practice including a Sydney address, that this could not reasonably be relied upon by the bank as amounting to a notification that the address of the company was to change.  I do not consider that that issue is to be resolved by taking a technical or legalistic approach to the matter.  However, even if regard is had to the addresses which appeared at the subscript to the letter that Mr Howe wrote, the indication given  is  that  his  professional  practice  would  continue  to  have  a  presence  in Auckland.   That together with the information that the account which was a New Zealand  one,  would  continue  to  be  needed  for  the  deposit  of  certain  cheques, provided there is some indication that, notwithstanding Mr Howe having removed himself to Sydney, the bank account would continue as previously.   Taking these matters into account, the fact that the letter made reference to Australian addresses at which Mr Howe would be able to be contacted did not, in the overall context, amount to notice that information regarding the New Zealand account should henceforth be sent to the Australian address.  That is to say, even if there were an implied term that the bank had an obligation to ensure that it had a current address, based on the tenor of the communications between Mr Howe and the bank, the bank was entitled to assume that notwithstanding that the defendant had moved to Sydney,

his business would continue to operate in New Zealand and that he must have a

7   2.1(c).

8 Clause 2.2.

requirement for a continuing New Zealand bank account.  Even if the bank had an obligation to behave reasonably on the matter, if it had thought about the matter, it would have been entitled to assume that the customer knew what he was doing and that the customer had its own reasons for maintaining a New Zealand bank account with a New Zealand address.

[38]     I next consider the argument that the provisions of the code of practice were implied into the contract between the parties.

[39]     I do not consider that the defendants’ contentions are correct.  I propose to follow the authorities of Dungey v ANZ Banking Group (NZ) Limited9 in which just such an argument was rejected.   I also consider that the plaintiff was correct in submitting:

4.28Further, in Clarke v Westpac Banking Corporation, Paterson J stated that although the Code “may be sound rules of business practice” they do not “... in my view, impose a legal obligation under which Mr Clarke can avoid liability under the guarantee or bring a counterclaim for a breach of a duty of care”.

[40]     It was also the contention of the defendant that independently of the code, the plaintiff was subject to an implied term to ensure customer information was accurate. I was referred to the well-known authority of BP Refinery (Westernport) Pty Ltd v Shire of Hastings10 which held that a term may only be implied in a contract where:

a)        the term is reasonable and equitable;

b)it is necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

c)        it is so obvious that it “goes without saying”;

d)       it is capable of clear expression; and

9 Dungey v ANZ Banking Group (NZ) Limited, [1997] NZFLR 404 (HC).

10 BP Refinery (Westernport) Pty Ltd v Shire of Hastings, (1977) 16 ALR 363 (PC) at 376. Approved by the New Zealand Supreme Court in Dysart Timbers Ltd v Nielsen [2009] NZSC 43, [2009] 3

NZLR 160 at [64].

e)       it does not contradict the express terms of the contract.

[41]     Ms Halloran further submitted:

However, this test must be read in conjunction with the express decision of the Privy Council to hold in Selangor United Rubber Estate Limited that an implied  general  contractual  duty  of  care  arises  out  of  the  relationship between a banker and customer.   This requires the bank to carry out its obligations with reasonable skill and care to a standard that is applicable to bankers.11

This  duty imposed  on  a banker  bank must  also be read  with the Privy Council’s decision in  Tai Hing Cotton Mill Limited which discusses the duties owed by customers to bankers and limits those solely to a duty not to act in a way that facilitates forgery and to make the bank aware of any known forgeries occurred.  It was held that no wider duty should be imposed on the customer.12

[42]     Both of those cases were concerned with different subject matter from the present one.  The Selangor United Rubber Estate Limited case was concerned with the contractual obligations on a bank to take proper precautions to ensure that the customer had actually mandated transactions on its account.   The second decision was concerned with the obligations of a customer to its bank to prevent fraudulent transactions.  The cases therefore cannot be said to have persuasive precedent effect that an implied term should be implied that the bank was under a duty to ensure that customer information held is accurate.

[43]     It is therefore necessary to enquire whether in the circumstances of this case the Court ought to imply a term.  The term to be implied would be to the effect that the bank has an obligation to ensure that the customer is actually receiving bank statements and that they are not being sent to an address which is no longer active. That will give the approximate sense of the obligation which the plaintiff, in this case the bank, was subject to.

[44]     In approaching this matter, it is necessary to bear in mind that the Courts will only imply terms to the extent that they need to “in order to repair an intrinsic failure

11 Selangor United Rubber Estate Limited v Cradock (No. 3) [1968] 2 All ER 1073 (HL) at 1118.

12 Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80 at 81.

of expression”.13    Implication of the term is required in order to give the contract business efficacy.14

[45]     It  is  necessary  to  scrutinise  the  activity  or  enterprise  which  the  parties contract is concerned with in order to determine whether the posited term is or is not required to give efficacy to the agreement.   If the agreement would operate sufficiently without the term then it should not be implied.

[46]     The parties in this case were engaged in the contract pursuant to which the plaintiff agreed to provide retail banking services to the customer and the customer agreed to pay the banks charges.  No doubt the bank had an obligation ancillary to this main objective to make available to the customer information about the state of his/her account.  If that were not so, the customer in ignorance of the true state of the account, might act to his own detriment by incurring additional charges or by having payment commitments dishonoured – to give but a few examples.  It would usually be the expectation, from the way that banking has been traditionally carried on, that the bank would generate periodic reports and send them to the customer without the necessity of any request.  Such periodic reports are usually in the form of monthly bank statements.   But the process is not entirely one-way.   The bank will only be able to send the information to the customer if it is in possession of a current address. Consistent with common sense and the provisions of the banking code, it will be the obligation of the customer to notify the bank of any change of address.   If the customer does not do so, he/she can hardly complain of a failure on the part of the bank to send the information to them.

[47]     If  the substance of the  agreement  between the  bank  and  its  customer is broadly along the lines that I have indicated in the previous paragraph then the contract would be a workable one.   It should not be necessary in order to give business efficacy to the contract to go further than that.  After all, the Court is not entitled to supplement the terms of the parties contract unless it is necessary to do

so.15

13 Rod Milner Motors v Atty Gen [1999] 2 NZLR 568 (CA) at 579

14 Law of Contract in New Zealand 4 Ed, 218

15 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 16 ALR 363 AT 376.

[48]     The proposed term of contract which the defendant contends for goes beyond this point.  It would add a further implied term to the affect that where a bank has reason to believe that a customer is no longer at the address which was originally supplied and is therefore not receiving communications from the bank, the bank is obliged to find out where the customer has gone to and either send the bank statements to that address or contact the customer and find out where they are to be sent.   A refinement on this proposed additional term might be that where a party includes in the communication material which suggest that they may have changed address, the bank is obliged to follow this up so as to ensure that the customer is continuing to receive bank statements.  Whichever formulation is adopted, and there may be others to similar effect, I do not accept that they are necessary to give efficacy to the contract.  The contract between the bank and the customer does not include a wider general obligation to look after the interests of the customer.   I accept that there is room for the view that that it would be a good thing if such contracts included an obligation of that kind.   But it is plainly not part of the contractual obligations of the bank in the case before me.   Nor should there be implied a provision to this effect.  Such a term is not necessary because the customer can ensure that he/she receives bank statements by ensuring that the bank has an up- to-date address.   Information about where the customer is living, after all, is information that the customer has.   As well, when a customer finds that monthly statements have been discontinued, it is a simple matter for him/her to contact the bank and have delivery of the information resumed.

[49]     Applying these observations to the facts of the present case, the customer must have known that it still had an account in New Zealand.  Otherwise Mr Howell would not have mentioned his intention of perhaps continuing to use the account in New Zealand to receive payments and he certainly would not have written out cheques on an account that he believed had been closed.   In my view it was his obligation to instruct the bank to send the statements to a new address if the old one was no longer available.

[50]     I agree that when the bank became aware that the box number was no longer an operative address it would have been sensible to follow-up the matter with the

customer  instead  of  just  noting  the  records  that  there  was  no  address  for  the customer.  Whether it would have been sensible or not, it was not obliged to do so.

[51]     In my judgment there has been no breach by the bank of its contract with the customer.  The defendant has no arguable defence therefore.

Duty of care

[52]     It was also a ground of opposition that the applicant breached a duty of care by failing to use the standard of care which banks might reasonably expect it to take according to the ordinary practice of bankers.  It was implicit in the submissions for the defendants that the duties included a duty to enquire periodically to ensure that the  address  which  the  bank  had  was  a  current  address.    It  is  implicit  in  the submission that the requirement for such a duty is self-evident because no evidence was called concerning the matter.

[53]     Apparently it has not been previously determined by the Court that such a duty of care should exist.  I accept that it might be foreseeable that unless the bank took the steps that are involved in the suggested duty of care damage might result to the defendants.  I do not however accept that it is just and reasonable that such a duty should be imposed upon the plaintiff.  It is a simple matter for persons in the position of the defendants to take the initiative to ensure that the bank has the correct current address to which statements ought to be sent.

[54]     I  note  the  submission  by  Ms  Chamberlain  that  it  would  be  an  onerous obligation for the bank to enquire of its thousands of customers on a periodic basis whether the address which had been supplied by the customer remained the current one.  The duty that is contended for may not be quite as wide as Ms Chamberlain understands.   The duty may be restricted to the bank being required to make reasonable enquiries as to the customer's whereabouts when communications that the bank sends out are returned because the address to which the information was sent is no longer the current address for the customer.  A duty of that kind may not have major resource implications for the bank.  It is not necessary to consider that aspect of the case further because, as I have determined, it would not be reasonable to

recognise a duty of care which made it the duty of the bank rather than the customer to ensure that there were current contact address details on the banks records.

Failure to make demand

[55]     The defendants further said that no demand had been made calling up the loan.  I reject this ground of opposition as well.  There is no doubt that in this case the customers did receive notice of the demand by email.  The Court of Appeal in ANZ National Bank Limited & Anor v Tower Insurance Limited & Anor16 establishes that  there  is  nothing  to  the  argument  under  this  ground  of  opposition.    In  his judgment at paragraph 35 in the ANZ National Bank Limited case Hammond J said:

Then too, the modern appellate authorities are clear that where actual notice has been received, notice deeming provisions in contracts are not intended to displace proof of the actual receipt of written notice at a Head Office. Tower does not dispute that it received actual notice of termination in that manner.

[56]     While that case concerned whether notice had been received at a head office or some other place of business, I consider it is equally applicable to cases where the exact means of providing written notice of demand have not been complied with. The important thing is that the substance of the bank’s demand was received by the parties and they must have understood that they were now under a liability to meet the amount of the debit balance in the account from the point where the notice was received.

Conclusion

[57]     For all of these reasons I conclude that the defendants have no defence to the application for summary judgment.   There will accordingly be judgment for the plaintiff as follows:

a)       Judgment in the sum of $32,994.83 in favour of HSBC;

16 ANZ National Bank Limited & Anor v Tower Insurance Limited & Anor  CA 194/2009.

b)Interest on the sum up to and including $30,000 at 13.5% per annum from 6 January 2012 to 15 May 2012 (130 days at $11.10 per day) amounting to $1,143.00;

c)        Interest on the sum in excess of $30,000 at 19% per annum from 6

January  2012  until  15  May  2012  (130  days  at  $1.56  per  day)

amounting to $202.80; and

[58]     The plaintiff is  to  provide  a memorandum  concerning the solicitor/client costs and disbursements that are claimed within 14 days and is to serve a copy on the defendants.  They will have a further 14 days within which to indicate whether there is any dispute about the amount claimed.  Should there be, I will require the plaintiff

to file affidavit evidence verifying the legal costs.

J.P. Doogue

Associate Judge