Magna Trust Company Limited v MA
[2025] NZHC 158
•13 February 2025
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2024-409-488
[2025] NZHC 158
BETWEEN MAGNA TRUST COMPANY LIMITED
Plaintiff
AND
ZHONG MA
Defendant
Hearing: 28 November 2024
Further submissions filed 10 December 2024 and 4 February 2025
Counsel:
P J Shanahan-Pinker for Plaintiff No appearance for Defendant
Judgment:
13 February 2025
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 13 February 2025 at 2.30 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
MAGNA TRUST COMPANY LIMITED v MA [2025] NZHC 158 [13 February 2025]
[1] This is a plaintiff’s application for summary judgment. The defendant, Zhong Ma, has not opposed the application nor taken any formal step in the proceeding.
[2] Summary judgment is sought in respect of amounts owing by Mr Ma pursuant to his guarantee of a commercial loan agreement entered into between the plaintiff and a company, JMA Builders Group Ltd. The plaintiff held security by way of first ranking registered mortgage over a property at Memorial Ave, Christchurch.
[3] The company breached the terms of the loan agreement when it went into liquidation on 27 April 2023 and failed to remedy its breach following service of a notice under s 119 of the Property Law Act 2007. As a consequence, the plaintiff undertook a mortgagee’s sale of the Memorial Ave property but there was a shortfall after sale of $592,857.60.
[4] The plaintiff also pleads that it issued and served notices under ss 119 and 122 of the Property Law Act 2007 including advice to Mr Ma of its intention to recover any deficiency from the sale of the mortgaged property from him under his guarantee.
[5] The plaintiff commenced this proceeding against Mr Ma on 3 September 2024 and that was accompanied by the application for summary judgment. The application was originally set down to be called on 31 October 2024 but was enlarged to 28 November 2024 to allow for service on Mr Ma. Mr Ma was served on 18 November 2024.
[6] At the hearing on 28 November 2024 the plaintiff’s counsel advised me of correspondence from Mr Ma’s counsel to the effect that he would not be defending the claim. I directed the plaintiff’s counsel to file a memorandum providing copies of any such correspondence, on receipt of which I proposed to deal with the application for summary judgment on the papers without the need for further appearances.
[7] A memorandum was received from the plaintiff’s counsel on 10 December 2024, attaching the correspondence from Mr Ma’s counsel which advised:
For these reasons, my client simply does not have the resources to defend your client’s summary judgment application, and he does not therefore intend to take any part in the proceeding.
[8]However, in addition Mr Ma’s counsel raised other issues, that:
(a)Mr Ma was not served with Property Law Act notices; and
(b)Mr Ma not been advised any shortfall on sale would be sought from him; and
(c)there was no evidence filed with the Court from a process server confirming service of Property Law Act notices.
[9] On 11 December 2024 I issued a minute to the plaintiff’s counsel requiring that they provide the following:
(a)affidavit evidence of service of Property Law Act notices; and
(b)confirmation that the s 122 Property Law Act notice addressed to Mr Ma and attached to the affidavit in support of summary judgment was complete.
[10] In respect of the second matter, I made this request because the copy of the notice under s 122 attached to the affidavit in support of summary judgment does not contain advice of an intention to recover any deficiency on the sale of the mortgaged property from Mr Ma.
[11] On 4 February 2025 I received a further memorandum from counsel for the plaintiff and an affidavit of service of Clive Martin Williams confirming service of the notice under s 119 upon the company and notices under ss 119 and 122 upon Mr Ma. However, counsel advises that the s 122 notice appeared to be incomplete in that it did not contain advice of the plaintiff’s intention to recover any deficiency upon sale of the mortgaged property from Mr Ma. Counsel, however, submitted that it was still appropriate to enter summary judgment.
[12] The application for summary judgment is made in reliance upon r 12.2 of the High Court Rules 2016, which reads as follows:
12.2 Judgment 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.
...
[13] The principles applied to a plaintiff’s summary judgment application are well established and are summarised by Associate Judge Osborne in Mount Grey Downs Ltd v Pinot Properties Ltd.1
[14] The plaintiff has satisfied its obligation to establish that Mr Ma has no defence to the claim.
[15] Having received further submissions and evidence from the plaintiff, the only matter of concern is the plaintiff’s failure to serve a notice upon Mr Ma under s 122 of the Property Law Act that advised him it proposed to recover any deficiency on the sale of the mortgaged property under his guarantee as required by s 122(1).
[16] However, this is not fatal to the plaintiff’s application. Section 122(4) of the Property Law Act provides that a failure to serve a notice under the section does not prevent the mortgagee from recovering any deficiency from a former mortgagor or covenantor. Section 122 reads as follows:
122 Notice of intention to recover deficiency in relation to mortgages over land
...
(4)A failure to serve a notice under subsection (2) on a former mortgagor or a covenantor does not prevent—
(a)the mortgagee or receiver from exercising the power of sale; or
1 Mount Grey Downs Ltd v Pinot Properties Ltd [2018] NZHC 3094 at [12].
(b)the mortgagee from recovering any deficiency from the former mortgagor or covenantor.
(5)However, a former mortgagor or a covenantor who is prejudiced by a failure to serve a notice under subsection (2) is, to the extent of the prejudice, released from liability to the mortgagee for the deficiency.
[17] Here there is no evidence before the Court that Mr Ma suffered any prejudice as a consequence of the non-compliance with s 122 of the Property Law Act. The onus was upon Mr Ma to provide evidence of prejudice and that it had deprived him of the ability to limit his liability for the deficiency claimed by the plaintiff. Mr Ma has provided no such evidence.
[18] On what is before me the plaintiff has satisfied me Mr Ma was not prejudiced because:
(a)Mr Ma was advised by a lawyer of the consequences of providing his guarantee.
(b)Mr Ma was the sole director of the company and was aware that it was in default of its obligations when it was placed into liquidation.
(c)A notice under s 119 of the Property Law Act was served on Mr Ma that the plaintiff intended to sell the mortgaged property.
(d)The s 122 notice advised Mr Ma to seek legal advice.
[19] I am therefore satisfied that Mr Ma is indebted to the plaintiff under his guarantee in the sum of $592,857.60 as set out in the statement of claim.
Result
[20]There shall be judgment for the plaintiff against Mr Ma in the sum of
$592,857.60.
[21]The plaintiff is entitled to contractual interest on that amount at the rate of
16.25 per cent per annum compounding monthly from 1 May 2024 to the date of payment pursuant to s 22 of the Interest on Money Claims Act 2016.
[22] The plaintiff seeks costs on a 2B basis and reasonable disbursements only (notwithstanding a contractual entitlement to solicitor and own client costs). I award it costs and disbursements on that basis in the amounts of $10,755 for costs and $2,038 for disbursements as set out in counsel’s memorandum of 10 December 2024.
O G Paulsen Associate Judge
Solicitors:
K3 Legal Ltd, Auckland
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