Scargetta v ASB Bank Limited - [2023] NZHC 2413

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-000198

[2023] NZHC 2413

BETWEEN
ELLIOT DANIEL SCARGETTA

Plaintiff

AND

ASB BANK LIMITED

Defendant

ANDREW JOHN HAWKES and VIVIAN JUDITH FATUPAITO

Second Defendants

Hearing: 2 August 2023

Appearances:

Plaintiff in Person

A E Simkiss / J J K Spring for the Defendants

Judgment:

1 September 2023

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 1 September 2023 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

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

Solicitors:

MinterEllisonRuddWatts, Auckland

SCARGETTA v ASB BANK LTD [2023] NZHC 2413 [1 September 2023]

Introduction

[1] In 2017 this Court entered summary judgment for ASB Bank Limited (ASB) against Mr Sgargetta in reliance on an unlimited deed of guarantee and indemnity he had given for loans made by ASB to Sleep Overs Limited (in receivership and liquidation) (Sleep Overs).1 The judgment was for the shortfall between the outstanding loans and the net proceeds of the mortgagee sales of two properties over which ASB had security.

[2] Mr Sgargetta resisted summary judgment on various grounds, including that it was reasonably arguable that ASB was liable for the sale of the two properties at an undervalue. The Court rejected that argument and others put forward by Mr Sgargetta.

[3] Mr Sgargetta appealed. The Court of Appeal dismissed Mr Sgargetta’s appeal, finding that there was no sufficiently tenable defence that the properties were sold at an undervalue.2 The Court of Appeal also found that there was insufficient evidence to establish that Mr Sgargetta’s other defences were reasonably arguable.

[4] In February 2022, Mr Sgargetta filed this proceeding against ASB and the receivers of Sleep Overs. In the statement of claim he claims, across three causes of action, that:

(a)ASB and/or the receivers sold the properties at an undervalue in breach of their statutory duties to obtain the best obtainable price; and

(b)ASB represented, promised, or impliedly agreed to facilitate syndication of the properties by Sleep Overs, and then inhibited the syndication process.

[5]In each case Mr Sgargetta claims relief in the form of damages of over

$1 million.

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

[6] ASB now applies to strike out all the causes of action as they relate to ASB, or alternatively for defendant summary judgment. If the Court declines to strike out all the causes of action or enter summary judgment, ASB seeks an order for security for costs against Mr Sgargetta in the amount of $150,000.

[7] ASB maintains that this Court and the Court of Appeal considered and determined the issues raised by Mr Sgargetta in his statement of claim, and his attempt to relitigate the same claims is an abuse of process. Alternatively, ASB claims that Mr Sgargetta has not pleaded any facts to support his claims. ASB also submits that Mr Sgargetta does…

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: [2023] NZHC 2413
Decision Date: 1 September 2023

CaseChat Overview and Summary

The High Court of New Zealand considered an application by ASB Bank Limited to strike out claims made by Mr Elliot Daniel Scargetta. Mr Scargetta had previously lost a summary judgment against ASB Bank in 2017, which was upheld by the Court of Appeal in 2021. In the present proceeding, Mr Scargetta sought to relitigate certain claims, which ASB argued were barred by res judicata and issue estoppel. The Court found that Mr Scargetta's first and third causes of action, which related to an alleged sale at an undervalue, were barred as they sought to relitigate issues already determined by the Court of Appeal. The Court held that Mr Scargetta was estopped from advancing these claims as they had been decided in earlier proceedings. The second cause of action, which related to an alleged obligation of ASB to facilitate the syndication of certain properties, was also struck out. The Court found that the statement of claim did not disclose a reasonably arguable cause of action for misrepresentation, breach of an implied agreement, or promissory estoppel. The Court held that mere knowledge of the syndication plans by ASB was not sufficient to establish a legal cause of action. The Court concluded that the first and third causes of action were struck out as an abuse of process, while the second cause of action was struck out for failing to disclose a tenable cause of action. The Court did not consider it necessary to address the issue of standing or the application for security for costs. The Court's preliminary view was that Mr Scargetta should pay ASB's costs plus reasonable disbursements, subject to any agreement between the parties or further submissions.

The key issues considered by the Court were whether the claims were barred by res judicata and issue estoppel, whether the statement of claim disclosed a reasonably arguable cause of action, and whether Mr Scargetta had standing to bring the claims. The Court found that the claims were barred as they sought to relitigate issues already determined by the Court of Appeal, and that the statement of claim did not disclose a tenable cause of action for the second claim. The Court did not find it necessary to consider the issue of standing or the application for security for costs. The Court held that the claims were an abuse of process and failed to disclose a tenable cause of action, and consequently struck them out.

Orders