King v ASB Bank Limited

[2013] NZHC 676

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-561 [2013] NZHC 676

BETWEEN  BRUCE JAMES KING Plaintiff

ANDASB BANK LIMITED Defendant

Hearing:         2 April 2013

Counsel:         Plaintiff in person

P Shackleton for defendant

Judgment:      2 April 2013

(ORAL) JUDGMENT OF LANG J [on application for interim injunction]

BRUCE JAMES KING V ASB BANK LIMITED HC AK CIV-2013-404-561 [2 April 2013]

[1]      Mr  King  is  the  owner  of  a  property  situated  at  5/5  Begbie  Place, Sandringham.   He has obtained advances from ASB Bank Limited (“the bank”) secured by way of a mortgage over the property.  Mr King has been in arrears with his obligations to the bank since some point in mid-2012.  As at February 2013, the arrears stood at approximately $23,000.

[2]      In order to protect its position, the ASB served a notice under the Property Law Act 2007 on Mr King.  Once that expired unremedied, the bank took steps to sell the property.  It arranged for the property to be sold by way of public auction at

9 am on 7 February 2013.

[3]      On 5 February 2013,  Mr King applied on  a without notice basis for an injunction  preventing  the  bank  from  continuing  with  the  auction.     Because

6 February 2013 was a public holiday, it was necessary for the Court to deal with the application immediately and without hearing from the bank.

[4]      After hearing submissions from Mr King, Courtney J issued an injunction restraining the bank from proceeding with the sale of Mr King’s property until further order of the Court.1   The Judge then listed the matter for mention before her on Friday 8 February 2013.

[5]      When  the matter came before the Judge again  on  8  February 2013,  she adjourned it further at the bank’s request until 21 February 2013.   When the proceeding was called before Ellis J on that date, the Judge made an order that the interim injunction was to be lifted.2    Her Honour took that step because she was satisfied that the grounds on which Courtney J had granted the interim injunction had

fallen away.

1 King v ASB Bank Ltd HC Auckland CIV-2013-404-000561, 7 February 2013.

2 King v ASB Bank Ltd HC Auckland –CIV-2013-404-000561, 21 February 2013 (Minute).

[6]      The bank has now arranged another auction, and this is due to be held at 9 am on Wednesday 3 April 2013.   On 28 March 2013, Mr King applied for another injunction.   Because the Easter Break was about to occur, I directed that the application be served immediately and set down for hearing before me this morning.

Background

[7]      In order to understand the issues that the present application raises, it is necessary to consider the background to the application.

[8]      When Mr King applied for the interim injunction before Courtney J, he was able to show that a friend, Mr Hamish Reid, had indicated a willingness to acquire a half-share in his property.  In return he would make available the sum of $50,000 to pay outstanding arrears and to reduce the mortgage on the property.   Mr Reid’s proposal had been conveyed to the bank in a letter dated 30 January 2013.  The bank responded by indicating it would consider the proposal provided Mr King consented to the bank dealing directly with Mr Reid regarding his financial affairs.  Mr King gave that consent, but by 5 February 2013 the bank had not made contact with Mr Reid to discuss the proposal.

[9]      It  was  against  that  background  that  Mr  King  made  his  application  to

Courtney J for an interim injunction.

The earlier decisions

[10]     The Judge recorded  that  Mr King’s  statement  of claim  proceeds  on  two general bases.  The first, encompassing several causes of action, was described by the Judge as a wide-ranging complaint about the bank’s motivation in taking steps to sell  the property in  the  face of complaints  Mr  King  had  made to  the  Banking Ombudsman.  The Judge was clearly of the view that these issues would not have been sufficient to warrant the granting of an interim injunction.  She said:3

[4]       … These complaints would not have warranted consideration … and

I do not discuss them further.

[11]     The second ground that Mr King relied upon related to the bank’s failure to engage with himself and Mr Reid regarding the proposal that Mr Reid acquire a half- share in the property in return for providing the sum of $50,000 to reduce Mr King’s indebtedness to the bank.  The Judge considered that the bank’s failure to engage on this issue was sufficient to give rise to a serious issue to be tried.  She expressed her

conclusion on this point in the following terms:4

[5]       The second ground was more specific, namely that the ASB had failed to properly advance the negotiations that were on foot regarding a proposal to sell a half-share in the property to a friend of Mr King’s in order to raise sufficient funds to clear the arrears.  This, I concluded, had sufficient substance to disclose a serious issue to be tried.

[12]     The Judge then turned to consider the issue of balance of convenience.  On this point she held in favour of Mr King as follows:

[10]      The balance of convenience plainly favoured Mr King. The property at Begbie Place is not only his home but the premises from which he runs his business.  On the other hand, if it transpires that Mr Reid’s proposal cannot be implemented or is unsuitable for some reason the ASB is not disadvantaged because it can simply proceed with a fresh auction.

[13]     When the proceeding came before Ellis J, the Judge was in receipt of a memorandum from the bank’s counsel dated 20 February 2013.  This contained the following paragraph:

3.      Since the interim injunction was granted, Mr King has advised ASB

that:

(a)     ASB’s legal advisors were not permitted to speak with Mr Reid;

and

(b)     Mr King is no longer advancing a proposal along the lines set out in

Mr Reid’s letter of 21 January 2013.

[14]     These matters were obviously sufficient to persuade Ellis J that the sole ground on which Courtney J had granted the interim injunction had fallen away.

This is apparent from the following passages from the minute issued by Ellis J on

21 February 2013.5

[3]       In the intervening period the bank’s position has crystallised, due principally to the fact the proposal referred to by Courtney J has not come to fruition.  In particular, Mr King’s friend, Mr Reid, has declined to speak to representatives of the bank and is clearly no longer interested in pursuing the matter.  Although Mr King has attempted to put other proposals to the bank they have not been accepted. A counter-proposal put by the bank to Mr King has also not been accepted by him.

[4]       The Court accordingly has now been placed in a position where the sole basis for the interim injunction granted by Courtney J has fallen away. There is no alternative proposal that is presently live that might form the basis of renewed or revised interim orders.  I therefore make an order that the interim injunction granted by Courtney J on 5 February 2013 is at an end and is lifted.  As I said to Mr King, it seems unlikely that the ASB will take immediate action to sell his property and I hope that he may be able to reach some form of compromise with the bank so that that does not happen.

The present application

[15]     In support of his argument today, Mr King contends that Ellis J misconstrued the basis on which Courtney J originally granted the interim injunction.  He contends that  Courtney  J  plainly  intended  the  injunction  to  remain  in  force  until  the substantive issues between the parties had been tried.  This would require a formal trial and judgment of the Court in which the Court determined that the injunction should no longer remain in place.  Mr King rejected any suggestion that Courtney J’s decision was based solely on her appreciation that it was necessary to provide Mr Reid and Mr King with a further opportunity to have the bank consider their joint proposal.

Decision

[16]     Reading Courtney J’s decision as a whole, I am left in no doubt that she was concerned only to preserve the position so far as Mr Reid’s proposal was concerned. The Judge’s concern clearly lay in the fact that one officer of the bank had failed to address Mr Reid’s proposal, notwithstanding the fact that another officer of the bank

had indicated that the bank would give it consideration provided Mr King consented to the bank dealing directly with Mr Reid regarding his affairs.

[17]     I therefore view Courtney J’s decision to grant the interim injunction as being based solely on her appreciation of the fact that it was necessary for the bank to engage in a serious consideration of the Reid proposal before taking further steps to sell the property.

[18]     Mr King now accepts that the Reid proposal will not proceed.  It has also not been possible for the bank and Mr King to come to any alternative arrangement acceptable to them both.  In the absence of the Reid proposal, I take the view that the sole ground on which the interim injunction was granted has now fallen away.  As a consequence, there is no longer any serious issue to be tried.

[19]     I accept that Courtney J considered that the balance of convenience plainly favoured Mr King.  That was on the basis, however, that she considered there was a serious issue to be tried.  As matters now stand, the balance of convenience needs to be reassessed.

[20]     Although Mr King uses the property as both his home and his business premises, the bank also has rights in the present context.  It has a contractual right to sell the property in order to realise the amount Mr King owes it.  It should not lightly be deprived of that right in the absence of a serious question to be tried.

[21]     In addition, the bank had entered into a deed of priority under which it has accepted that its priority is limited to the sum of $182,000.  Thereafter, Mr King’s mother is entitled to priority over the bank in respect of advances she has made to her son up to $50,000.  Counsel for the bank advises me that the current value of the property is somewhere between $220,000 and  $240,000.   The amount currently outstanding to the bank is more than $220,000.  Allowing for the costs of sale, it appears reasonably clear that there is a real risk that the bank will suffer a shortfall from the sale of the property.   It is essential that the property be sold as soon as possible if any shortfall is to be minimised.  If the matter was permitted to proceed to a substantive trial, interest and legal costs will increase appreciably.

[22]     As a consequence, I am satisfied that the balance of convenience has now shifted.  It now favours the bank rather than Mr King.

[23]     Before departing with the matter, I record that I reject Mr King’s submission that Courtney J clearly intended to preserve the status quo until such time as the substantive trial has been held.  It would have been a simple matter for the Judge to have directed that the interim injunction was to remain in place until that time. Instead of taking that step, she directed that the interim injunction was to remain in

place until further order of the Court.   The wording that the Judge used6  clearly

indicates she considered that the injunction should remain in place until such time as it became clear that the Reid proposal could not be implemented, or that the bank found it not to be acceptable.

[24]     For that reason I decline to grant the order that Mr King seeks.  The auction at 9 am on 3 April 2013 must be permitted to proceed.

Costs

[25]     The bank has a contractual entitlement to recover legal and enforcement costs from Mr King.  For that reason I make no order as to costs.

Lang J

Solicitors:

Simpson Grierson, Auckland
Copy to:

B King, Auckland

6 At [10] of her judgment.