Tailor v Westpac New Zealand Limited

[2024] NZHC 877

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-2290

[2024] NZHC 877

BETWEEN

BEENA TAILOR AND JYOTIN TAILOR

Appellants

AND

WESTPAC NEW ZEALAND LIMITED

Respondent

Hearing:

19 March 2024

Appearances:

Appellants in Person

H M Jaques for the Respondent

Judgment:

19 April 2024

JUDGMENT OF POWELL J

This judgment was delivered by me on 19 April 2024 at 4.00 pm pursuant to

r 11.5 of the High Court Rules

…………………..

Registrar/Deputy Registrar

BEENA TAILOR AND JYOTIN TAILOR v WESTPAC NEW ZEALAND LIMITED [2024] NZHC 877 [19

April 2024]

[1]    Beena and Jyotin Tailor appeal two decisions of Judge D J Clark. The first struck out their claims against Westpac New Zealand Ltd (“Westpac”) and entered summary judgment against them (“strike-out judgment”).1 The second awarded indemnity costs against Mr and Mrs Tailor on the strike-out judgment (“costs judgment”).2

Background

[2]    Although Judge Clark undertook a wide-ranging discussion of the merits of Mr and Mrs Tailor’s claims against Westpac, ultimately it was his Honour’s conclusion that the claims could not succeed because Mr and Mrs Tailor lacked standing to pursue those claims. This was because his Honour accepted that Mr and Mrs Tailor were made bankrupt in September 2022 and as a result all of their assets, including any claims against Westpac, had vested in the Official Assignee.3 Consequently, Mr and Mrs Tailor had no power to recover any property belonging to them at the date of their bankruptcy.4 His Honour went on to note that the only person who can bring proceedings in respect of Mr and Mrs Tailor’s estate is the Official Assignee and the Official Assignee had not given consent for these proceedings.5

[3]    Indemnity costs were imposed by Judge Clark as a result of Westpac’s contractual entitlement contained in the loan documents. His Honour assessed the amounts sought and concluded they were reasonable in the circumstances.6

The case for Ms and Mr Tailor

[4]    Mr and Mrs Tailor contend that the strike-out decision was wrong on the basis that they are not, in fact, bankrupt, were not in breach of their obligations to Westpac, and that Westpac should not have sold two of their properties at what Mr and Mrs Tailor considered to be a significant undervalue. Instead, they consider that Westpac should be paying them compensation and cancelling the mortgagee sales that have already taken place.

1      Tailor v Westpac Bank [2023] NZDC 19084 [strike-out judgment].

2      Tailor v Westpac Bank [2023] NZDC 20729 [costs judgment].

3 Strike-out judgment at [45].

4      Insolvency Act 2006, s 101.

5 Strike-out judgment at [48].

6      Costs judgment at [15]–[22].

Discussion – Strike-out Judgment

[5]    As Judge Clark noted, a defendant is entitled to summary judgment when all causes of action have been dismissed, while pursuant to r 15.1 of the District Court Rules 2014 a “court may strike out all or part of a pleading if it…discloses no reasonably arguable course of action…or case appropriate to the nature of the pleading”.7

[6]    In this case, and contrary to Mrs Tailor’s submission, there can be absolutely no doubt that Mr and Mrs Tailor are currently bankrupt and have been since September 2022. They were adjudicated bankrupt on 22 September 2022 by order of Associate Judge Gardiner.8

[7]    Nearly a year later, in September 2023, both Mr and Mrs Tailor applied for orders annulling their adjudications in bankruptcy.9 These applications were dismissed by Associate Judge Paulsen after neither Mr nor Mrs Tailor appeared at the hearing.10 In the reasons subsequently given, Associate Judge Paulsen noted that Mr and Mrs Tailor were aware of the hearing and had not indicated that they would not be present.11

[8]    An application for leave to appeal against Associate Judge Gardiner’s decision was subsequently filed out of time. Mr and Mrs Tailor did seek to extend time to appeal, but their application was dismissed by the Court of Appeal who found:12

There can be no doubt that there has been an act of bankruptcy – failure to comply with a bankruptcy notice – and the tax assessment on which the notice was founded is deemed correct unless challenged under the relevant processes in the Tax Administration Act 1994. This the applicants failed to do. No purpose would be served by extending time to appeal the adjudications.

[9]    A subsequent application to recall the Court of Appeal’s decision was also dismissed.13

7      District Court Rules 2014, r 15.1(1)(a).

8      Commissioner of Inland Revenue v Tailor [2023] NZHC 2520 at [1].

9      Commissioner of Inland Revenue v Tailor, above n 8, at [2].

10 At [3].

11 At [4].

12     Tailor v The Commissioner of Inland Revenue [2023] NZCA 178 at [4].

13     Tailor v Commissioner of Inland Revenue [2023] NZCA 559.

[10]   Given, therefore, that Mr and Mrs Tailor were bankrupt from September 2020 and remain so, it is clear that Judge Clark was correct to conclude there was no jurisdiction to consider their claims against Westpac in the event the Official Assignee did not consent to the proceedings.

[11]   This is because any cause of action would have arisen prior to the bankruptcy. At the earliest, any claim would have arisen around December 2021 when Westpac declined to renew Mr and Mrs Tailor’s restructured home loan for a further 30-year term with a six-month fixed interest rate at Westpac’s “special interest rate”. The subsequent defaults by Mr and Mrs Tailor on the loan documents, resulting in the serving of Property Law Act notices, occurred in May 2022.

[12]   Given that position, there can be absolutely no doubt that any claim against Westpac, along with all the other assets previously held by the Tailors, was vested in the Official Assignee at the date of the bankruptcy. As the Official Assignee did not consent to Mr and Mrs Tailor’s proceedings, Judge Clark was correct in striking out Mr and Mrs Tailor’s claim against Westpac.

[13]   Although this conclusion determines the appeal against the strike-out judgment, for completeness I observe Judge Clark also noted there were real issues with the way in which the claim against Westpac was conceptualised. These were summarised by his Honour in the following terms:

The Tailors’ claim against Westpac

[31]      The Tailor’s statement of claim is dated 24 November 2022. It is one page long which briefly sets out a background claimed by the Tailors in terms of the refinancing issues. It talks about how the Tailors were forced to pay

$30,000 to another party (which I perceive is the Body Corporate) before Westpac would refix the home loan. It pleads that even though that payment was made, further demands were made by Westpac of $18,564 towards their home loan, even though they had previously requested the home loan to be refixed. Essentially what they are claiming is that they were forced to accept higher interest rates which they say is “very wrong”.

[32]They further plead;

They are blackmailing us because we have a mortgage with them since 10 years and they thought, we don’t have any other option. It remains to fulfil their requirements, therefore, they are not resolving our query.

[33]They then plead three causes of action. I set them out in full;

(a)WESTPAC is not a reliable bank. They are giving us financial stress and blackmailing us to pay more repayment however we shouldn’t have to.

(b)They have the incapacity to understand our financial situation and resolve our query. They just want their repayment without giving us any service.

(c)They have put us in a financial hardship condition which is not acceptable.

[34]      The Tailors seek relief which is compensation for $50,000 and an order requiring Westpac to refix their home loan at 3.05 per cent interest rate for the 30-year term.

[14]As Judge Clark also noted:

[40] The essence of Mr and Mrs Tailor’s claim is they say Westpac acted either in breach of the existing contractual terms under their loan agreement by refusing to provide them with the low fixed interest rate offer or owed some form of tortious of fiduciary duty to allow them to refinance at the special fixed rate.

[15]   Although Judge Clark did not ultimately determine the issue, it is plain that the way in which Mr and Mrs Tailor have attempted to articulate their claim against Westpac entirely fails to engage with the loan documentation before the Court such that it is impossible to discern any rational basis for Mr and Mrs Tailor’s claim against Westpac and it is extremely difficult to see how any such claim could possibly be repleaded. I therefore conclude that Mr and Mrs Tailor’s broader claim against Westpac also “discloses no reasonably arguable cause of action” or is vexatious such as to warrant striking out on those grounds as well and/or to warrant the issue of summary judgment.

Discussion – Costs Judgment

[16]   As with Mr and Mrs Tailor’s challenge to the strike-out judgment, Mr and Mrs Tailor have not identified any reason to indicate Judge Clark was wrong in imposing indemnity costs against Mr and Mrs Tailor in the costs judgment. Having reviewed the documentation, I am satisfied there was clearly a contractual basis for indemnity costs to be awarded and no submissions have been made as to why Judge Clark’s assessment of the reasonableness of the costs claimed by Westpac was not correct.

[17]   As a result, Mr and Mrs Tailor’s appeal against the costs judgment must also be dismissed.

Decision

[18]   Mr and Mrs Tailor’s appeal against the strike-out judgment and costs judgment is dismissed.

[19]   In the event the appeal was dismissed, Westpac again seek indemnity costs from Mr and Mrs Tailor. I direct that Westpac file and serve a memorandum setting out the costs sought on the appeal by 5 pm on 6 May 2024 and any response on behalf of Mr and Mrs Tailor needs to be filed and served by 20 May 2024. I will then determine costs on the papers.

Powell J