Scargetta v ASB Bank Limited - [2024] NZHC 2109

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-000198

[2024] NZHC 2109

BETWEEN
ELLIOT SGARGETTA

Plaintiff

AND

ASB BANK LIMITED

First Defendant

ANDREW JOHN HAWKES and VIVIAN JUDITH FATUPAITO

Second Defendants

Hearing: On the papers

Appearances:

Plaintiff in Person

A D Marsh for the First-Named Second Defendant

Judgment:

31 July 2024

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 31 July 2024 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Minter Ellison, Auckland A D Marsh, Christchurch Copy to: E Sgargetta

SGARGETTA v ASB BANK LTD [2024] NZHC 2109 [31 July 2024]

Introduction

[1] The plaintiff, Elliot Sgargetta, has applied for an order extending the time for service of his notice of proceeding and statement of claim on the first-named second defendant, Andrew Hawkes. The application is necessary because r 5.72(2) of the High Court Rules 2016 (HCR) deems a proceeding discontinued if it has not been served within 12 months of when the notice of proceeding and statement of claim are filed.

[2] Mr Hawkes opposes the application because Mr Sgargetta has not shown that reasonable efforts were made to effect service on him. He says Mr Sgargetta has failed to adequately explain why the documents were not served within the timeframe required, there are no other good reasons why the extension of time should be granted, and he would be severely prejudiced by an extension as it would circumvent a limitation period that would otherwise bar Mr Sgargetta’s claim.

Background

[3] Mr Sgargetta’s claim relates to events that took place in 2016. In February 2016, the second defendants, Mr Hawkes and Vivian Fatupaito (the Receivers) were appointed by ASB Bank Ltd (ASB) to Sleep Overs Ltd (Sleep Overs) and related companies. ASB had lent around $3.4 million to Sleep Overs. The loans were secured by mortgages over two Queenstown lodges owned by Sleep Overs, and an unlimited cross guarantee and indemnity from Mr Sgargetta and the related companies. Sleep Overs defaulted on the loans, the Receivers were appointed, and the secured properties were sold in April 2016.

[4] In 2017 ASB took summary judgment proceedings against Mr Sgargetta under the guarantee and indemnity for the shortfall in the amount received on the sale and the outstanding loan balance. Mr Sgargetta opposed the application. One of his defences was that the Receivers sold the lodges at an undervalue. The High Court rejected Mr Sgargetta’s defences and ordered summary judgment.1 He appealed to the Court of Appeal, which rejected his appeal in September 2021.2

1 ASB Bank Ltd v Sgargetta [2017] NZHC 3097.
2 Sgargetta v ASB Bank Ltd [2021] NZCA 459.

[5] On 8 February 2022, Mr Sgargetta filed the present statement of claim and notice of proceeding in this Court. In the statement of claim he claims, across three causes of action, that:

(a)ASB and/or the Receivers…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 2109
Decision Date: 31 July 2024

CaseChat Overview and Summary

In the case of Scargetta v ASB Bank Limited, the plaintiff, Elliot Sgargetta, sought an extension of time to serve his notice of proceeding and statement of claim on the second defendant, Andrew Hawkes, due to the time elapsed since the filing of the documents. The primary issue was whether Mr Sgargetta had made reasonable efforts to serve the documents on Mr Hawkes within the required timeframe, and if so, whether there was a good reason to extend the time. The court evaluated the circumstances under which the application was made, the reasonable efforts made by Mr Sgargetta, and the consequences of granting or denying the extension.

The court held that Mr Sgargetta had not made reasonable efforts to serve the documents on Mr Hawkes within the stipulated period. Despite the oversight by the court regarding the lapsed time, Mr Sgargetta did not promptly apply for an extension and instead waited until nearly a year later. The court found that Mr Sgargetta could have easily hired a process server and that his claims of being unaware of the need for personal service were unconvincing. Moreover, the application was made after the statement of claim had ceased to be valid, and granting the extension would deprive Mr Hawkes of a limitation defence.

Additionally, the court noted that there was no merit to Mr Sgargetta’s allegations against the Receivers, as previously determined by the Court of Appeal. Given these factors, the court concluded that there was no strong reason to grant the extension, especially considering the Court of Appeal's findings that there was no evidence supporting Mr Sgargetta’s claims.

As a result, the application for an order extending the time for service was dismissed. Mr Sgargetta was ordered to pay Mr Hawkes' costs associated with opposing the application.

Orders