Renata v Bank of New Zealand
[2016] NZHC 2613
•1 November 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-2100 [2016] NZHC 2613
BETWEEN SARAH ROSE RENATA
Plaintiff
AND
BANK OF NEW ZEALAND & ORS First Defendant
AND
STEPHEN REX TIETJENS Second Defendant
AND
METRO HUB OPERATIONS LIMITED (IN RECEIVERSHIP AND LIQUIDATION)
Third Defendant
Hearing: 4 August 2016 Appearances:
M Heard & A W McDonald for Applicant
M D Toulmin & D M Kraitzick for RespondentsJudgment:
1 November 2016
JUDGMENT OF PAUL DAVISON J
This judgment was delivered by me on 1 November 2016 at 4pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Lee Salmon Long, Auckland
Minter Ellison Rudd Watts, Auckland
RENATA v BNZ & ORS [2016] NZHC 2613 [1 November 2016]
[1] The plaintiff, Ms Renata, was the sole director and shareholder of the third defendant, Metro Hub Operations Limited (Metro Hub). Metro Hub is now in liquidation.
[2] On behalf of Metro Hub, Ms Renata entered into six credit contracts, known as “AFAs”,1 with the first defendant, the Bank of New Zealand Limited (BNZ). In all but one of the AFAs, Ms Renata was named as Metro Hub’s guarantor and she personally agreed to indemnify the bank against all loss or damage which it may sustain by reason of any breaches by Metro Hub.
[3] The secured property under each of the AFAs was the asset purchased by Metro Hub using the loan funds. These were either trucks or commercial trailers. The bank also holds security by way of a registered first mortgage2 (“the mortgage”) over Ms Renata’s residential property in Papatoetoe (“the property”), the terms of which provide that she shall pay on demand “all the secured moneys”. The term “secured moneys” is defined in the mortgage as being “all moneys now or in the future owing or remaining unpaid to the Bank from the Mortgagor…” This includes moneys “which [she] may be or become liable to pay to the Bank on any guarantee or
indemnity (express or implied) given to the Bank”.
[4] Metro Hub is in default under AFA1 and AFA3, and BNZ has issued Ms
Renata with a s 119 PLA notice,3 notifying her of its intention to sell the property.
[5] Ms Renata has issued proceedings against the bank (as well as the second and third named defendants). She seeks to extinguish the guarantee and indemnity obligations under AFA1 to AFA3 and AFA5, and re-open the “oppressive” AFAs under the Credit Contract and Consumer Finance Act 2003 (CCCFA).
[6] By this application, Ms Renata seeks an interlocutory injunction to restrain the bank from exercising its rights as mortgagee of the property, and specifically an order that BNZ “be restrained from exercising any of the powers specified in s119 of
the Property Law Act 2007 in respect of the property…”
1 “Asset Finance Agreements”.
2 Mortgage Instrument No. 7613944.4, North Auckland Registry.
3 Property Law Act 2007.
Background
[7] Metro Hub is a company established by Ms Renata to conduct the business of owning and leasing trucks and trailers to transport operators.
[8] On behalf of Metro Hub, Ms Renata obtained finance from BNZ to fund the purchase of four trucks and two trailers. Each truck and each trailer was the subject of a separate AFA.
[9] Ms Renata was employed at BNZ during the time that AFA1, AFA2 and AFA3 were entered into. She then left the bank’s employment, and was no longer an employee of BNZ when AFA4, AFA5 and AFA6 were entered into.
[10] AFA1 is dated 18 July 2012 and relates to a loan advance of $138,000, used to purchase a 2004 Steelbro commercial trailer (registration number D864S).
[11] The first paragraph of AFA1 provides:
IT IS AGREED that Bank of New Zealand (the “Lender”) and the Borrower respectively covenant and agree as set out in this Agreement and in the Asset Finance Agreement Standard Terms and Conditions (the “Standard Terms”)…
[12] Then, at page 2:
6 Standard Terms
The Standard Terms contains all other terms of this Agreement and it is acknowledged and agreed by the parties that the terms and conditions of the Standard Terms are incorporated in and form part of this Agreement.
[13] And, at page 3:
Borrower
The Borrower acknowledges that this Agreement has been executed by the Borrower on the 19th day of July 2012 and that the Borrower has been handed a copy of this Agreement and the Standard Terms on the date of execution.
[14] On 20 July 2012, Ms Renata executed a document entitled “Asset Finance Agreement – Standard Terms and Conditions Acknowledgement” in which she acknowledged on behalf of the “Borrower” that:
Bank of New Zealand is providing: METRO HUB OPERATIONS
LIMITED with an Asset Finance Agreement dated July 18, 2010 (the AFA”)
– and in consideration of Bank of New Zealand providing the AFA Sarah
Rose Renata are [sic] providing a guarantee of the obligations of METRO HUB OPERATIONS LIMITED under the AFA.
[15] The document also sets out the borrower’s acknowledgement that the Standard Terms have been disclosed, and that they “will apply to every future AFA” provided by BNZ to Metro Hub. The document further provides that “provided there have not been amendments to the Standard Terms”, BNZ is not required to provide Ms Renata/Metro Hub with a new copy of the Standard Terms for subsequent AFAs.
[16] Ms Renata, on behalf of Metro Hub, thereafter entered into five further AFAs with BNZ:
(a) AFA2, dated 17 August 2012, was in respect of an advance of
$256,371.80 secured against a 2012 Mitsubishi Fuso truck
(registration REN910).
(b) AFA3, dated 17 August 2012, was in respect of an advance of
$256,371.80 secured against another 2012 Mitsubishi Fuso Shogun truck (registration number REN920).
(c) AFA4, dated 16 January 2013, was in respect of an advance of
$379,690.28 secured against a 2013 Western Star tractor unit
(registration number REN940).
(d) AFA5, dated 1 February 2013, was in respect of an advance of
$279,338.53 secured against a 2013 Mitsubishi Fuso truck
(registration number REN930).
(e) AFA6, dated 30 April 2013, was in respect of an advance of
$114,827.50, secured against a 2013 Freighter trailer (registration number W367D).
[17] Apart from AFA4, Ms Renata is named in all the AFAs as a guarantor of the obligations of Metro Hub.
[18] On 24 July 2014, the second defendant, Mr Tietjens, was appointed by BNZ as receiver of the secured property under AFA1 to AFA6. This appointment was made pursuant to the Standard Terms, which provided that in the event of a default under the relevant specific loan document,4 the security interest created by the loan documents would become immediately enforceable and the bank had the power to appoint a receiver of all or any part of the secured property. Ms Renata maintains that, at a meeting with Mr Tietjens on 27 July 2014, Mr Tietjens advised her not to make any payments in respect of AFA4 and AFA5 because “he was going to sell [the
secured property under AFA4 and AF5] anyway”.
[19] Metro Hub made payments on 4 August 2014 and 25 August 2014 in respect of arrears under AFA1, AFA2 and AFA6. By 3 October 2014, Metro Hub had paid all amounts secured by AFA2 and AFA6. The arrears on AFA3 were not paid because as Ms Renata explains, “we intended to refinance the full balance in a short space of time, on refinancing.”
[20] On 26 August 2016, Mr Tietjens sold the secured property under AFA4 and AFA5. I note Ms Renata alleges in her statement of claim that these were sold at undervalue and contrary to the method of sale which had been agreed between Mr Teitjens and herself.
[21] Notices were served upon Ms Renata and Metro Hub in respect of defaults under AFA1 and AFA3, and on 6 July 2015, BNZ served Metro Hub with an
4 “Relevant Documents” being defined as meaning “the Asset Finance Agreement, each of the Collateral Securities and any letter of offer, guarantee, mortgage, general security agreement, specific security agreement, or other documents required by us or which any person may enter into from time to time with or in favour of us which is related to this agreement.” Collateral Security is also defined as meaning “each guarantee, and each security agreement entered into in favour of the BNZ in relation to the security interests.”
“Acceleration Notice”, calling up and declaring as immediately due and payable, the whole of the amount outstanding under both AFA1 and AFA3. On 29 July 2015, Ms Renata was served with a notice under s 119 PLA issued by BNZ, as mortgagee of the property, which stated that she was in default as she had failed to satisfy the guarantee under AFA1 and AFA3. The notice stated that if the default was not remedied by the payment of $237,024 together with interest on or before 9
September 2015, all amounts secured by the mortgage would be due and payable, and the powers of BNZ as mortgagee to enter into possession, manage and sell the mortgaged property would become exercisable.
Ms Renata’s (amended) statement of claim
[22] Ms Renata alleges five causes of action against the defendants. I do not need to review each of them here, but for the purposes of this application, I note that the essence of Ms Renata’s case is two-fold. First, she says that BNZ, in appointing Mr Tietjens as receiver and when issuing its PLA notices to Metro Hub and/or Ms Renata, has relied upon the Standard Terms which were not properly incorporated into the AFAs. In Ms Renata’s affidavit of 10 May 2016, she says:
12. … I was not provided with any “Standard Terms” or “General Terms”… I thought that all the terms of the loans were in the AFA documents that Mr Pohio5 sent to me.
…
14. On 20 July 2012 [Mr Pohio] emailed me a further “acknowledgement form”. His email said something along the lines of “oops, can you sign that I need it to draw down.” This document was an acknowledgment of the terms of the AFA. I did not think anything of this, as I believed I had already been provided with all of the terms by [Mr Pohio], and I signed and returned it to him that day.
15. I executed 5 further AFAs… The last three of which were in a different format to the first three AFAs and referred to General Terms instead of Standard Terms. I was provided with neither at any stage prior to signing any AFA.
[23] Secondly, Ms Renata says that, with the exception of AFA6, she did not intend to enter into any of the AFAs as a guarantor. She says:
5 Mr Taylor Pohio was the BNZ Business Partner who arranged the preparation and execution of the AFA documentation and who executed the AFAs for and on behalf of BNZ.
13. I did not read AFA-1 prior to executing it. I signed the document where it said Metro Hub or it had my name, and I initialled where it said initial… I got used to executing things quickly and without really thinking about them, and didn’t read or think about the AFA terms before I executed them…
…
16. I am named in AFA-1 through to AFA-3 as a guarantor. I was not aware that I was giving a guarantee and did not intend to do so when I executed those documents.
…
18. AFA-5 names me as a guarantor, but as for the other AFAs I was not aware of that when I executed the documents and I did not intend to enter into a guarantee. AFA-5 was sent to me by email by [Mr Pohio]. I executed the document and returned it to him and the loan was drawn down that day. The next day [Mr Pohio] sent me another email asking me to execute an acknowledgment that I had given a personal guarantee and a waiver of independent legal advice. I was confused by this as I was not aware I had given a personal guarantee. Initially I said I would send those through to [Mr Pohio] but after I reflected about it I thought there was no reason why I should sign those documents when I had not intended to give a guarantee and I did not return them.
19. Prior to execution of AFA-6 [Mr Pohio] said to me that he would have to take a personal guarantee for that transaction because the total lending had exceeded $1 million… Given [Mr Pohio’s] explanation and the support the bank had given to that point I was OK with providing a personal guarantee when executing AFA-6.
[24] Accordingly, Ms Renata pleads:
To the extent that any of the AFAs include operative terms making the plaintiff a guarantor or indemnifier of the liabilities of [Metro Hub], they are oppressive within the meaning of s 118 of the CCCFA:
(a) Except for AFA-6 it was not brought to the plaintiff’s attention that the
contracts included guarantee or indemnity obligations;
(b) The plaintiff did not understand any of the AFAs except AFA-6 to include guarantee or indemnity obligations; and
(c) The BNZ did not understand or intend that the plaintiff would provide guarantees or indemnities for any of the AFAs except AFA-6.
[25] Ms Renata relevantly seeks:
(d) An order under s127(d) of the CCCFA extinguishing any guarantee or indemnity obligations in the AFAs;
(e) A permanent injunction preventing the BNZ from acting on the PLA Notice (plaintiff’s home) and any and all other demands and notices made on her as purported guarantor;
…
[26] As an alternative ground, Ms Renata claims that she is entitled to set-off as the PLA notices issued by BNZ were invalid in that they did not comply with s 120(1)(d) of the PLA, because in issuing the notices, BNZ was relying on powers contained in the standard terms which were not properly incorporated into the AFAs. She seeks the same relief as set out above, namely:
A permanent injunction preventing the BNZ from acting on the PLA Notice (plaintiff’s home) and any and all other demands and notices made on her as purported guarantor;
Ms Renata’s application for interim orders
[27] For the plaintiff, Mr Heard submits that it is “unconscionable, harsh, and unjustly burdensome (and so oppressive within the meaning of s 118 of the CCCFA) that the terms of the AFAs do not reflect what was intended by her and the relevant BNZ staff member”.
[28] Furthermore, BNZ was required to notify her of the Standard Terms before they were incorporated into the AFAs, particularly because they are so onerous. And finally, it is submitted that Mr Tietjens was “an invalidly appointed receiver… as the usual contractual provisions making the receiver the agent of the company do not bind.”
[29] For BNZ, it is submitted that there is no serious question to be tried, and the balance of convenience and overall justice of the case favour refusing the injunction.
The test for granting interim relief
[30] An application for interim relief under r 7.53 of the High Court Rules is to be considered and determined in accordance with the approach taken in American Cyanamid Co v Ethicon Ltd, namely to first address the issue of whether the evidence before the court discloses that there is a serious question to be tried and,
secondly, where the balance of convenience lies.6 The two heads are not exhaustive. The ultimate question is where the overall justice lies.7
[31] Whether there is a serious question to be tried is a threshold issue. It is not sufficient for a plaintiff just to say “there is a tenable cause of action from a legal point of view and a conflict of evidence on the facts”.8
[32] In determining where the balance of convenience lies, the court must weigh one interest against another.9 This involves weighing up the adequacy of damages should relief not be granted; the preservation of the status quo in the sense of “the last peaceable state between the parties”; the uncompensatable disadvantages to each party; and the relative strength of each party’s case.10
Is there a serious question to be tried?
[33] I am not satisfied that here there is a serious question to be tried.
[34] It is inherently difficult to accept Ms Renata’s claim that at no stage did she intend to give a guarantee or indemnity. The AFAs clearly and unequivocally refer to her as a guarantor, and under a sub-heading “Guarantee”, each of the AFAs provides that Ms Renata “…unconditionally guarantee to the lender due and punctual payment under and performance of the terms contained or implied in the Asset Finance Agreement and the Standard Terms by the Borrower.” The AFAs also state that, as a separate and independent stipulation, Ms Renata agrees:
… to indemnify the Lender against all loss or damage which the Lender may sustain by reason of any breaches by the Borrower of the terms contained or implied in the Asset Finance Agreement and the Standard Terms or by reason of the Asset Finance Agreement or the Standard Terms becoming void or unenforceable in any respect against the Borrower.
6 American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL) at 408 (per Lord Diplock).
7 Harvest Bakeries Ltd v Klissers Farmhouse Bakeries Ltd [1985] 2 NZLR 129 (CA) at 142.
8 Cunningham v Butterfield HC Timaru, CIV-2011-476-400 at [36].
9 See Lord Diplock’s comment in Siskina (Owners of Cargo Lately Laden on Board) v Distos Compania Naviera S.A. [1979] ACT 210 (HL) at 256: “The right to obtain an interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action”.
10 Wellington International Airport Ltd v Air New Zealand Ltd HC Wellington CIV-2007-485-1756,
30 July 2008.
[35] Ms Renata’s claim that she did not intend to give her personal guarantees and did not know or appreciate that she had done so, flies in the face of the evidence from which it is clear that she did sign the guarantees. The documentary evidence included the following:
(a) The application for finance (which was completed by Metro Hub on
21 May 2012) contains a heading entitled “Security”. Under this heading, Ms Renata’s home address is handwritten by her, followed by a sentence which reads in print: “For limited liability companies it is usual to supply a Director’s Guarantee together with a mortgage over residential property and a General Security Agreement over the assets of the company”.
(b) BNZ’s letter of offer, dated 1 June 2012, describes Ms Renata as
“GUARANTOR”.
(c) The guarantee and indemnity obligations in AFA1 and AFA3 appear in a different and separate section from the earlier sections of the AFAs (wherein Ms Renata signed as “director” of Metro Hub), and on a separate page, under the heading “Guarantee”, where she signed as “guarantor”. She signed as guarantor in the presence of a witness, who has also signed the document and written their full name, occupation and address.
(d)In a separate document entitled “Asset Finance Agreement – Standard Terms and Conditions Acknowledgement”, signed by Ms Renata, it is acknowledged that Ms Renata is providing a guarantee of the obligations of Metro Hub.
(e) Ms Renata had earlier11 granted the BNZ a mortgage over her residential property on terms that provided security for any liability to
11 On or about 21 January 2010, Ms Renata entered into four home loan facilities with the BNZ which incorporated the provisions contained in the BNZ’s Home Loan Facility Master Agreement and Standard Terms and Conditions and which were secured by a first registered mortgage over her residential property at Paptoetoe.
the bank that she became liable for on any guarantee given by her to the bank.
[36] It is also significant, in my view, that Ms Renata in her affidavit of 9
September 2015, has sworn that between 19 July 2012 and 30 April 2012, “…myself as guarantor and [Metro Hub] entered into four Asset Finance Agreement contracts…” In her affidavit of 10 May 2016, she makes a number of further references to herself as having signed as guarantor, and she has exhibited to that affidavit her correspondence with Mr Young of BNZ, in which she stated:12
Hi Chris, after attending the meeting with Steve as you have requested I am now requesting a meeting with yourself and Dave in my capacity as the guarantor of these loans over REN9200 (sic) and D864S. … I propose to pay the amount of arrears of each agreement by Friday 24th October to get this up to date and work through a solution to make good on amounts owing as I am personally liable for this debt. [emphasis added]
[37] It is apparent from this correspondence that Ms Renata unreservedly accepted that she was responsible and liable as the guarantor of the loans. That acceptance is in stark contradiction to her current assertion of not intending to be a guarantor under the AFAs.
[38] Mr Heard refers to two exhibits attached to Mr Chris Young’s affidavit, dated
7 July 2016, filed in support of BNZ’s opposition to Ms Renata’s application. The first document is a copy of Metro Hub’s application for finance, and the second is a letter of offer from BNZ, dated 1 June 2012, confirming “that the Bank is prepared to make funds available to you [Metro Hub] substantially according to the following terms and conditions”. Mr Heard says these documents show that “BNZ intended, like the plaintiff, that the only security for its lending on AFA-1 through AFA-5 would be the assets financed”. For example, BNZ’s letter of offer lists “Mitsubishi Fuso Truck”, “Mitsubishi Fuso Truck”, and “Swinglift” as secured property, without making any reference to Ms Renata’s residential property (which had been listed as security in Metro Hub’s application for finance). However, these documents pre-
date the AFAs, which make clear reference to Ms Renata as a guarantor. Read in that
12 This email correspondence is dated 22 October 2014.
context, the terms of the offer are superseded by the specific terms of the AFAs which refer to her as guarantor, particularly given that the letter of offer itself states:
The terms and conditions of this commitment listed are not exhaustive or
complete….
In the event of inconsistency between this document and the legal documentation relative to any further binding offer which the Bank may make in respect of this transaction, the legal documentation shall prevail EXCEPT that any conditions/covenants in this letter that are not substantially repeated in the legal documentation shall continue to apply and shall prevail over the legal documentation.
[39] Ms Renata, herself, had considerable experience in the documenting of BNZ loans. She was previously employed at the BNZ in the position of a “Staff Banker/Banking Advisor”, and as a “Business Banking Manager/Advisor”, processing loan applications made to BNZ by BNZ personnel and business clients of BNZ, and she had delegated credit authority to approve single loan application amounts up to $1.2 million without the approval of a Senior Credit Control Manager. With that level of responsibility and experience, it is implausible that she would have signed the AFAs as guarantor without knowing and appreciating the legal consequences of doing so.
[40] Accordingly, there can really be little room for any doubt that Ms Renata well knew and understood the contents and effect of the AFAs, and appreciated that she was entering into contractual terms that meant that she was personally liable for the loans and was indemnifying Metro Hub.
[41] I am not persuaded by the submission that the Standard Terms could not be relied upon by BNZ because they had not been properly incorporated into the AFAs. Again, this submission is inconsistent with the specific provisions of the AFAs, each of which state:
6 Standard Terms
… it is acknowledged and agreed by the parties that the terms and conditions of the Standard Terms are incorporated in and form part of this Agreement.
[42] I also find Ms Renata’s claim that neither she nor Metro Hub were given a copy of the Standard Terms prior to the AFAs being signed, implausible because, in the AFAs, Ms Renata acknowledged that:
I/we have been handed a copy of this guarantee, the Asset Finance Agreement and the Standard Terms on the date of the execution of this Guarantee.
[43] In support of her version of events, Ms Renata has deposed:
From my time working at the BNZ I know that all loan documentation that was prepared at the time of AFA-1 was printed with a footer that includes the customer’s account number. Metro Hub’s account number was 1244-
0072494-000. This appears at the bottom of the AFA-1 documents after the
prefix “AFA-“. The Standard Terms the bank relies upon show another customer’s account number which I am not familiar with.
[44] The footer in the Standard Terms contains the number “UD-9232-517FCBF4-
01-01”. This does not match Metro Hub’s account number. BNZ will need to explain this discrepancy at the substantive hearing but, for present purposes, I am not satisfied this inconsistency is sufficiently significant to support Ms Renata’s contention that it is seriously arguable that she was not provided with a copy of the Standard Terms at the relevant time. In any event, Ms Renata said she was provided with the Standard Terms for the first time on 17 March 2015, a copy of which is annexed to her affidavit. The footer of this document records: “AFA-0548-
0027698000-AAFU-664748.doc”. This number does not match Metro Hub’s account number, so it may be that that the numbers on these documents refer to something other than the BNZ customer account number.
[45] Moreover, even if true, it is immaterial that Ms Renata had not read the AFAs and the Standard Terms therein, before signing the AFAs. In L’Estrange v Graucob, Scrutton LJ distinguished “ticket cases” from cases where there is a signed contract:13
In cases in which the contract is contained in a railway ticket or other unsigned document, it is necessary to prove that an alleged party was aware, or ought to have been aware, of its terms and conditions. These cases have no application when the document has been signed. When a document containing contractual terms is signed, then, in the absence of fraud, or, I
13 L’Estrange v Graucob [1934] KB 394 (CA) cited in BBX Financial Solutions Pty Ltd v Wallace
[2011] NZCA 667 at [47].
will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.
[46] Mr Heard submits that because of the onerous nature of their provisions, for the Standard Terms to become part of the AFAs, BNZ had to give notice of them by specifically pointing them out to Ms Renata. I do not agree.
[47] First, Mr Heard has not made submissions as to why the Standard Terms are particularly onerous or unusual. A party seeking to reopen a credit contract on the basis of oppression must do more than simply assert it. The party making an allegation of oppression is required to establish what the standards of commercial practice are, relative to the particular type of contract under consideration, and then contrast those standards with those exhibited in the circumstances of the challenged
contract.14
[48] At best, Ms Renata submits that oppression arose because neither party had intended that she be a guarantor of the AFAs. However, as I have noted, this contention is simply implausible in the face of the documentation, which includes Ms Renata signing an acknowledgement that she had “been handed a copy of this guarantee, the Asset Finance Agreement and Standard Terms on the date of execution of this Guarantee.”
[49] Secondly, as I read the decision of BBX Financial Solutions Pty Ltd v Wallace, the Court of Appeal has endorsed the High Court of Australia’s application of L’Estrange for the purpose of Australian law.15 By analogy, the AFAs were signed contracts so the notice requirement does not apply.
[50] Mr Heard has cited Nalder v Biddle (Nelson) Ltd v C F Fishing Ltd in support.16 That case was summarised in BBX as follows:
[45] In Nalder & Biddle the parties, a marine engineering company and a boat owner, had entered into a partly oral and partly written contract for fitting out a fishing vessel. After the contract was concluded, work for the fit
14 Italia Holdings ( Properties ) Ltd v Lonsdale Holdings (Auckland) Ltd [ 1984] 2 NZLR 1 (HC)
at [15]–[16].
15 Above n 13, at [48], citing Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52, (2004)
219 CLR 165 at 184-186.
16 Nalder & Biddle (Nelson) Ltd v C & Fishing Ltd [2007] 1 NZLR 721 (CA).
out was specified on job cards, which purported to incorporate the marine engineer’s standard terms and conditions. The conditions included a provision limiting the engineer’s liability. This Court held that the fact the boat owner had no knowledge of the limitation provision at the time the contract was concluded was decisive. Because the boat owner had no knowledge of the condition when the contract was concluded, the conditions could not be said to have been incorporated.
[51] I consider Nalder can be distinguished from the present case. The contracts relied upon here are written contracts, which were all signed by Ms Renata, so there can be little room for confusion (unlike Nalder, which involved a partly oral and partly written contract). As I have said, having regard to the documentary evidence, Ms Renata’s evidence that she was not provided with a copy of the Standard Terms before she signed the AFAs and that she did not read the contents of the AFAs (which made reference to the Standard Terms) is implausible.
[52] If it is correct that the Standard Terms were appropriately and expressly incorporated into the AFAs, the bank was entitled to exercise its rights pursuant to cl
11.2 of the Standard Terms to:
Call up and demand payment of the Amount Outstanding, even if not due;
and/or
…
… do anything and exercise any right which you could do or exercise in relation to the Secured Property, including the right to take possession of all or any part of the Secured Property or sell or otherwise dispose of all the Secured Property or any part of it in such manner and on such terms as we may determine, and deduct from the sale proceeds the costs of the sale and any other unpaid charges or fees;
…
Appoint any person or persons to be a Receiver of all or any part of the
Secured Property.
[53] Since I have found that it is at least seriously arguable that the Standard Terms were properly incorporated into the AFAs, I do not consider it to be seriously arguable that BNZ was acting without authority when it exercised its powers and rights under the Standard Terms.
[54] In other words, if the Standard Terms were properly incorporated into the
AFAs (as I think they are), then the bank was entitled to do those things set out at
[52] above, including appointing Mr Tietjens as receiver. This means that Mr Tietjens is the agent of Metro Hub and not BNZ17 and, more to the point, the claims and allegations directed against Mr Tietjens by Ms Renata18 are irrelevant to the issues arising in these proceedings.
[55] For the reasons I have given, Ms Renata has not demonstrated that she has a real prospect of succeeding with her claim, and consequently, I am not satisfied Ms Renata has overcome the first hurdle of the test for the granting of an interim order.
[56] I note that in response to the allegation that the PLA notices are technically (and not substantively) defective, BNZ has proposed to reissue them to ensure full and proper compliance. I agree this is the appropriate course.
Conclusion
[57] There is no serious question to be tried.
[58] For completeness however, I record that in my view the balance of convenience and the overall justice of the case is clearly against the granting of an interim injunction.
[59] While Ms Renata obviously has a strong attachment to the property, in my view, it is clear from the documentary evidence that she had agreed to be personally responsible and liable for the loans to Metro Hub. In addition to the security over the trucks and trailers purchased with the loan proceeds, Ms Renata had also granted the bank a registered first mortgage over her property. By granting the mortgage over her residential property, and using it as security for borrowing by Metro Hub from the bank for business purposes, Ms Renata had knowingly amalgamated her business interests with her personal interests as a home owner. That contractual
matrix of legal obligations represents the status quo prior to the commencement of
17 Receiverships Act 1993, s 6(3). See also, s 2 “Grantor”.
18 For example, that he breached his equitable duties and those duties contained in ss 18 and 19 of the Receiverships Act, by advising her not to repay the arrears on two of the secured assets despite Metro Hub being in a position to pay all arrears; and then selling those assets without obtaining the best price reasonably obtainable at the time of sale. Also, by failing to notify her that a statutory demand for $28,000 had been served upon Metro Hub; and that a liquidation application was filed.
the plaintiff’s claim. Although Ms Renata used her residential property to provide the bank with security, the AFAs are fundamentally of a commercial nature, and BNZ ought not be prevented by means of an interim order, from enforcing its rights as a secured creditor in order to recover the outstanding amounts it claims as due.
[60] Furthermore, the bank is in a position to meet an award of damages should
Ms Renata ultimately succeed in her claim or any part of it.
[61] Accordingly, the Plaintiff’s application for an order granting an interim injunction to restrain the BNZ from exercising its powers under the mortgage is declined.
Costs
[62] The defendants are entitled to costs. In the event that the parties are unable to agree on costs, they are to file memoranda with the Court in accordance with the following timetable. The defendants shall file their memorandum by 5 pm, 10 working days following delivery of this judgment, and the plaintiff shall file her memorandum within a further 10 working days.
[63] Upon receipt of memoranda, I shall proceed to determine and fix the costs on the papers.
Paul Davison J
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