Rupa v Bank of New Zealand

[2008] NZCA 495

IN THE COURT OF APPEAL OF NEW ZEALAND

CA76/2008
[2008] NZCA 495

BETWEENDILIP-KUMAR RUPA, SARDADEVI RUPA, REWA-KARA RUPA AND KOKILA RUPA

Appellants

ANDBANK OF NEW ZEALAND

Respondent

Hearing:19 November 2008

Court:William Young  P, Wild and Priestley JJ

Counsel:Dilip Rupa and Sardadevi Rupa in person for the Appellants

M J Tingey for Respondent

Judgment:26 November 2008 at 10 am

JUDGMENT OF THE COURT

A        The appeal is dismissed.

BThe appellants must pay the bank costs for a standard appeal on a band A basis and usual disbursements.

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REASONS OF THE COURT

(Given by William Young P)

[1]       The Bank of New Zealand (“the bank”) advanced money to the appellants and took security over properties that they owned.  When they defaulted, the bank demanded payment and issued Property Law Act notices.  This provoked proceedings by the appellants in the High Court in which they challenged the validity of the loan agreements and securities.  The bank counter-claimed for the money it was then owed (which was around $500,000) and also sought declarations as to its entitlement to enforce its security over the properties.

[2]       On 31 January 2008, Associate Judge Abbott granted summary judgment against the appellants on both the appellants’ claim and the bank’s counterclaim.  The appellants appealed and sought a stay of execution.  The application for a stay was declined by Heath J on 16 May 2008.  The bank then took steps towards the sale of one of the properties over which it had security.  This led to a further stay application – this time to this Court – which was dismissed on 27 June 2008.  The Court took the view that the appeal had no prospects of success.

[3]       The upshot was that the appellants paid in full what they owed the bank and the mortgages were discharged but without prejudice to their entitlement to continue to prosecute the appeal which we must now address.

[4]       In the High Court, the appellants sought to avoid liability on three primary grounds:

(a)The money which was advanced was credited to their bank accounts rather than handed over in hard currency;

(b)The loans had been sold by the bank as part of a securitisation process; and

(c)There had been breaches of the disclosure provisions of the Credit Contracts Act 1981.

[5]       The first argument was not relied on, except perhaps indirectly, in this Court.  It is, in any event, so obviously devoid of merit as to warrant no further discussion. 

[6]       The second argument was met in the High Court by evidence from a senior employee of the bank confirming that there had been no securitisation in relation to the advances in question.  The appellants’ complaint before us seemed to focus not so much on the substance of this argument but rather on an alleged absence of disclosure by the bank and the procedures adopted in the High Court.  We will address issues of disclosure and process separately, albeit briefly.  On the substantive issue – whether the Associate Judge was right to dismiss the appellants’ contentions on the evidence – we are well-satisfied that he was correct to do so.

[7]       The appellants’ complaints about disclosure were at the forefront of their arguments before us.  Their primary contention was that a document of 13 July 2006 which they sent to the bank amounted to a request for disclosure under s 19 of the Credit Contracts Act.  In company with the Associate Judge, we disagree.  While many requests for information were made in the document of 13 July 2006, they were not for information which could be sought under s 19 of the Act.  We note that the appellants’ arguments about disclosure conflated disclosure requirements under the Credit Contracts Act, the disclosure required where there is discovery and disclosure associated with the prudential regulation of the banking system.  We also note what might be thought to be the obvious point that if there was no securitisation of the advances to them, there was nothing to disclose in that respect.

[8]       We see nothing in the complaints made about process.  The appellants’ assertion that the loans had been securitised was not supported by evidence and was flatly denied by an officer of the bank who was in a position to know whether they had been securitised.  What they relied on as a request under s 19 of the Act plainly was not a request as contemplated by that section.  There was nothing untoward in the way in which the bank’s evidence was produced, an extension of time given by the Associate Judge, the decision by the Associate Judge that the case be determined on the basis of the affidavit evidence or in any other respect.

[9]       As to costs, the bank seeks indemnity costs relying on cl 10 of its mortgage which entitles it to debit the accounts of the mortgagors with costs incurred by the bank associated with, inter alia, the mortgage and any defaults under it.  We have reservations whether the contractual provision relied on is applicable given the discharge of the mortgage and what we assume is the absence of an ongoing account held by the appellants with the bank.  Mr Tingey did not advance any detailed argument on this point when we raised it with him.  In the circumstances, we propose simply to award costs on the usual party and party basis.

[10]     Accordingly:

(a)The appeal is dismissed;

(b)The appellants must pay the bank costs for a standard appeal on a band A basis and usual disbursements.

Solicitors:
Bell Gully, Auckland for Respondent