Taituha v ASB Bank Limited
[2015] NZHC 1075
•20 May 2015
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV-2014-488-0210 [2015] NZHC 1075
BETWEEN NGATI KAWA ARAMIHA TAITUHA
Appellant
AND
ASB BANK LIMITED Respondent
Hearing: 18 May 2015 Appearances:
Appellant in person
R S Wood for the RespondentJudgment:
20 May 2015
JUDGMENT OF ELLIS J
This judgment was delivered by me on 20 May 2015 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Solicitors:
R S Wood, Auckland
Copy to Appellant
TAITUHA v ASB BANK LIMITED [2015] NZHC 1075 [20 May 2015]
[1] Mr Taituha is in a long running dispute with the ASB Bank (the Bank) over a credit card debt. Judgment for the debt was entered against him by Judge de Ridder in the District Court at Kaikohe on 21 November 2014.1 He was ordered to pay the debt of $5,304.05 together with accrued interest and costs. Mr Taituha now appeals that decision.
[2] In the District Court Mr Taituha disputed his obligation to pay principally on the grounds that the Bank had failed to provide him with an “original instrument of indebtedness in its original form” proving that there was an agreement between him and the Bank. Now, he also says that the Bank induced him to enter into an agreement for use of the card without making disclosure of important facts, namely that the debt has been securitised.
[3] Mr Taituha also filed a counterclaim seeking compensation for alleged breach of his privacy rights. The compensation sought involves the Bank’s closure of all his accounts and the discharge of all his liabilities, credit card debts, contractual obligations, financial and security interests against him.
District Court judgment
[4] Judge de Ridder recorded that the essential facts of the matter were not in dispute. These included:
(a) Mr Taituha’s application for the card, his receipt of it together with the conditions of use governing the use of the card;
(b)his subsequent use of the card (which, on each occasion, had the legal effect of affirming his acceptance of the conditions including his liability for the charges incurred, the payment terms and the
consequences of non-payment); and
1 ASB Bank v Taituha DC Kaikohe CIV-2013-027-241, 21 November 2014.
(c) Mr Taituha’s breach of his $5,000 credit limit, his failure to meet the minimum payment due, and the amount owing on final demand for payment, all of which resulted in closure of the account.
[5] The Judge then noted the correspondence between Mr Taituha and the Bank in which Mr Taituha accepted an obligation to pay the Bank only once he received the “original instrument of indebtedness in its original form”. In the absence of that, Mr Taituha asserted the Bank’s claim would be “legally and financially settled”.
[6] The Judge also recorded the basis of Mr Taituha’s counterclaim, namely Mr Taituha’s objection to the Bank’s advice that it would be doing a credit check on him and his request for its authority to do so. The Bank’s credit manager, Mrs Ahamad, gave evidence about those two matters, to the effect that:
(a) the Bank relied solely on the terms and conditions of use of the card, and that there was no such document as an “instrument of indebtedness”;
(b)the terms and conditions gave the Bank authority to do a credit check, as did Mr Taituha’s acceptance of this by way of a disclaimer when he applied for the card and his further agreement of the Bank’s authority to do so when he successfully applied to increase his credit limit.
[7] At [19] of his judgment, Judge de Ridder found there was a binding contract between Mr Taituha and the Bank. He said:
… I have no hesitation in concluding that the Bank offered Mr Taituha a credit facility. Mr Taituha then had two options. One was to return the card to the Bank which would be a rejection of the Bank’s offer. The other option was to use the card which he did. In using the card, he accepted the terms and conditions stipulated by the Bank in its offer to him to provide the credit facility. That constitutes a binding contract between the Bank and Mr Taituha. There is no need for any ‘original instrument of indebtedness’ nor for that matter any other document. Asking the Bank to produce one is merely a contrivance on the part of Mr Taituha in a vain attempt to avoid liability.
[8] And at [21], his Honour found there had been no breach of Mr Taituha’s
privacy rights:
… [t]he Bank was perfectly entitled according to the terms and conditions to refer Mr Taituha’s details to a credit agency. As such there was no requirement on the Bank to accept or reject Mr Taituha’s assertion that his privacy rights had been breached. By not accepting Mr Taituha’s assertion the Bank did not agree to extinguish the debt owed by Mr Taituha.
[9] The Judge accordingly concluded that the Bank had proved its claim, gave judgment in its favour for the sum claimed, and dismissed Mr Taituha’s counterclaim.
The appellant’s grounds of appeal
[10] Mr Taituha’s grounds of appeal against the whole of the judgment appear in his affidavit dated 19 December 2014 filed with his Notice of Appeal and appear to be as follows:
(a) contrary to Judge de Ridder’s statements at [4] and [13] of his judgment, the essential facts of the Bank’s claim were disputed as was the background to them;
(b)the Bank failed to cross-examine him on the contents of his affidavit when it had a legal responsibility to do so, and therefore the ‘facts’ contained in the affidavit were not disputed by the Bank;
(c) he was prevented from cross-examining Mrs Ahamad on “the balance books of the Bank” by Judge de Ridder’s ruling that it was not relevant, which resulted in a miscarriage of justice;
(d)the Bank’s terms and conditions of card use were null and void as the Bank had concealed important facts, misrepresented the offer and induced him into the terms and conditions of card use on the basis of that misrepresentation. The relevant non-disclosure/misrepresentation related to an alleged securitisation of his card account to a third party.
[11] Mr Taituha says that it was as a result of this securitisation that the Bank no longer held the original instrument of indebtedness, as it was now held by a third
party. He contends that the Bank therefore has no standing to claim any interest in his outstanding credit card account.
Discussion
[12] Notwithstanding what Mr Taituha says in his grounds of appeal he has, in fact, taken no issue with the essential facts, namely that he:
(a) applied for a Classic Visa card online;
(b) received the card together with the conditions of use;
(c) elected to use the card and operated the account for seven years;
(d)exceeded his credit card limit and failed to make the minimum payments due; and
(e) accepted the amount was due (but said that he would only pay on receipt of the original instrument of indebtedness).
[13] Nor was any issue taken by Mr Taituha with the background to the Bank’s claim – the statements of account, the demands for payment, the provision for credit checks in the Conditions of Use, the disclaimer by him on applying for the card and acceptance of such authority when he applied for an increase of his credit limit. The only matters in dispute at the hearing (and in this appeal) are, as Judge de Ridder described “contrivances”, namely the Bank’s alleged omission to produce a document that does not (and is not required to) exist, and (more recently) the Bank’s alleged failure to disclose the alleged securitisation of his account, which not only has not occurred but which also cannot occur.
[14] A defence to a debt claim that is based on an alleged obligation by the creditor to produce the “original instrument of indebtedness in its original form” appears to have its origins on the internet. All that is really meant by it is that the creditor needs to prove the existence of the contract upon which the debt claim is based. But in the case of credit cards in New Zealand (and no doubt elsewhere) the
relevant contract is not evidenced by a document that is signed by both parties in writing. Rather, it is evidenced by the provision of a credit card together with the (non-negotiable) standard form conditions of use and the subsequent use of the card which constitutes the contract, and the card-holder’s subsequent liability is based on an application of the standard form conditions to the relevant circumstances. And as Judge de Ridder noted, a defence based on an alleged requirement on a bank to produce the “original instrument of indebtedness in its original form” has previously
been rejected by this Court.2
[15] As far as the new, “securitisation”, defence is concerned, the difficulties faced by Mr Taituha are that:
(a) his credit card account is an unsecured credit facility, it is not a security;
(b)his credit card account has not, in fact, been securitised or provided as a bond cover for the Bank to a third party;
(c) since the credit card account is not securitised, nothing is required to be disclosed by the Bank;
(d)the only security the Bank has in respect of an unsecured credit card facility is the personal covenant of the cardholder to keep to the conditions of use governing the operation and use of the card account;
(e) even if his credit card account was securitised (which it was not) the Bank complies with its disclosure obligations by Public Notice or through its website where its General Disclosure statement appears together with quarterly, half yearly disclosure statements and its Annual Report comprised of a full Disclosure Statement. In this way,
the Bank’s ‘books’ are available for scrutiny.
2 Gerritsen v ASB Bank Limited [2014] NZHC 2755.
[16] Lastly, and even if his credit card account was securitised, which it was not, it would make no difference. The conditions of use would still apply and he would simply be required to pay the debt to a third party.
[17] As far as the other matters raised or potentially raised by the appeal are concerned:
(a) Mr Taituha’s evidence was addressed by and rebutted by Mrs Ahamad at the hearing. The Bank’s case was not that Mr Taituha was lying, but rather that he was mistaken as to the law. I have explained above why I consider that view was correct;
(b)as Judge de Ridder said, the “balance books of the Bank” had no relevance to the matters in issue;
(c) Mr Taituha’s privacy counterclaim is precluded by the conditions of use.
Conclusion
[18] Mr Taituha’s grounds of appeal are without merit. I accept Mr Wood’s submission that he is merely fabricating defences in a futile attempt to avoid liability for charges which, he accepts, he incurred on his Classic Visa card credit facility. The appeal is dismissed. The Bank is entitled to its 2B costs and disbursements in
the usual way.
Rebecca Ellis J