Taylor v Bank of New Zealand

[2012] NZHC 3064

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-008089 [2012] NZHC 3064

BETWEEN  WARREN WILLIAM DENIS TAYLOR Plaintiff

ANDBANK OF NEW ZEALAND Respondent

Hearing:         5 November 2012

Appearances: Applicant in Person

D Broadmore for Respondent

Judgment:      16 November 2012

JUDGMENT OF VENNING J

This judgment was delivered by me on 16 November 2012 at 4.30 pm, pursuant to Rule 11.5 of the

High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Buddle Findlay, Auckland

Copy to:            Plaintiff

TAYLOR v BNZ HC AK CIV-2011-404-008089 [16 November 2012]

Introduction

[1]      Bank of New Zealand (BNZ) applies for summary judgment as a defendant in relation to Mr Taylor’s claim against it.  Alternatively, BNZ applies to strike-out one or both of the causes of action in the claim.   If neither of those applications succeed, or if the strike out is successful only in part, BNZ seeks security for costs.

Background to the claim

[2]      Mr Taylor is the current trustee of the Moresby Family Trust (the Trust) and brings the claim on behalf of the Trust.  Mr Taylor was a builder and developer in Waihi.  He established the trust in November 2005, as the vehicle to carry out the property developments he was involved in.  BNZ is the Trust’s bank.  Although Mr Taylor’s solicitor, Mr Bogiatto, was trustee at the time, Mr Taylor had all the relevant dealings with BNZ.

[3]      On behalf of the Trust, Mr Taylor pleads that on or about June 2008 the Trust applied to BNZ for an advance of $189,000, to enable it to repurchase a property at

72A Moresby Avenue, Waihi. Mr Taylor contends that Mr Barclay, the employee of BNZ with whom Mr Taylor regularly dealt, orally approved the advance to the Trust. Mr Taylor pleads that at the same time, Mr Barclay also gave conditional approval for a further advance of $259,000, to be secured over a property owned by the Trust at 22 Walker Street, Waihi.

[4]      Mr Taylor  says  the  conditional  approval  required  the Trust  to  provide  a balance sheet with particulars of income to demonstrate the ability of the Trust, or Mr Taylor personally, to service the advance.   Mr Taylor alleges he satisfied the condition by providing the information to BNZ in either December 2008 or January

2009.  Despite that, BNZ refused to advance either the $189,000 or the $259,000.[1]

Sometime later, in November 2009, BNZ reviewed the Trust’s position and agreed to

advance  the  $189,000  to  enable  the  Trust  to  repurchase  the  Moresby  Avenue property.  Mr Taylor says that was too late.

[1] Mr Barclay was transferred to a new role in the Bay of Plenty regional office in October 2008.

[5]      The Trust raises two causes of action. The first is breach of contract. The second is breach of the Fair Trading Act 1986 (the Act), by way of misleading and/or deceptive conduct.   Under the contract cause of action the Trust initially sought specific performance requiring  BNZ to  advance the $259,000.    Mr Taylor  now accepts the Trust’s claim must be limited to damages.    Under the Act, the Trust seeks a declaration of misleading or deceptive conduct and an award of damages (once quantified).

[6]      This is the second proceeding that the Trust has brought against BNZ, arising out of the same set of circumstances.  In the first proceeding, BNZ obtained an order for security for costs in the sum of $17,500.  Security was not paid.  The claim was stayed  and  then  struck  out.     The  Trust  has  subsequently  has  brought  these proceedings  and  paid  the  costs  (but  not  the  security)  awarded  on  the  first proceedings.  Despite these proceedings raising the same claim again, no res judicata arises. The first claim was not dismissed on its merits.   A dismissal for want of prosecution is a procedural decision rather than one made on the merits and is not a

final  decision  for  the  purposes  of  res  judicata.[2]      The  background  is,  however,

relevant, particularly to BNZ’s present application for security for costs, should it be

unsuccessful in its application for summary judgment or, alternatively, strike out.

[2] K R Handley (ed) Res Judicata (4th ed, LexisNexis, London, 2009) at [6.04]. Regarding finality, see Pople v Evans [1969] 2 Ch 255 and other cases cited at K R Handley (ed) Res Judicata (4th ed, LexisNexis, London, 2009) at [2.13], n 1. At [5.02] the authors discuss the meaning of “finality”, stating that a judicial decision may be final for one purpose but not another. For example, although unusual, it is possible for issue estoppel to arise in relation to an interlocutory judgment. In Joseph Lynch Land Co Ltd v Lynch [1995] 1 NZLR 37 (CA) the Court held the ultimate question is concerned not so much with the character of the earlier decision, that is, whether it should be regarded as final or interlocutory, but rather whether in the circumstances it is reasonable to regard the earlier decision as a final determination of the particular issue which one of the parties now wishes to raise.

[7]      In support of its application for summary judgment, BNZ has filed affidavits by  three  of  its  employees:  Mr  Barclay,  Mr  Sherwill  and  Ms  Mortimer  (two affidavits).  In response, Mr Taylor has filed his own affidavit (attaching one from

the earlier proceedings) together with an affidavit from a friend, Ms Atkinson and

one from his solicitor, Mr Bogiatto.  As noted, Mr Bogiatto was the trustee of the Trust at all material times, having been appointed such at the time of the Trust’s inception on 25 November 2005.  He advised BNZ on 15 December 2009 that he had resigned as trustee and that Mr Taylor had replaced him.

The approach to the applications

[8]      Given the evidence that has been put before the Court, I treat the prime application as the application for summary judgment.[3]

Principles to apply on an application for summary judgment by the defendant

[3] An application for summary judgment by a defendant is similar to an application for strike out, save that it will require affidavit evidence to be provided: Nandro Homes Ltd v Datt HC Auckland CIV-2008-404-6676, 16 March 2009 at [16], summarising the principles set out in Westpac Banking Corp v M M Kembla NZ Ltd [2001] 2 NZLR 298 (CA) at [58] – [64]. A further difference is that a summary judgment application will only succeed where the defendant shows that none of the causes of action can succeed: Westpac Banking Corp v M M Kembla NZ Ltd [2001] 2 NZLR 298 (CA) at [64]. If that is not possible then the proper course is to apply to strike out the untenable claims: Andrew Beck (ed) McGechan on Procedure (online looseleaf ed, Brookers) at [HR12.2.07].

[9]      Rule 12.2 of the High Court Rules permits a defendant, who has a clear answer to the plaintiff which cannot be contradicted, to put up evidence which constitutes the answer, so that the proceedings may be summarily dismissed.[4] In this case, the onus is on BNZ to satisfy the Court that neither of the causes of action in the  plaintiff’s  statement  of  claim  can  succeed:    r  12.2(2).    An  application  for summary judgment by the defendant will generally be inappropriate where there are disputed material issues of fact, or where the material facts cannot confidently be concluded from the affidavit evidence before the Court.  Summary judgment for the

defendant will, however, be appropriate where the procedure sufficiently exposes the facts and legal issues.  At the end of the day, the Court must be satisfied that the claim cannot succeed.  It is not enough to show that the claim may be a weak one. The final assessment should not be arrived at on a fine balance of the evidence:

Westpac Banking Corp v M M Kembla New Zealand Ltd.[5]

[4] Nandro Homes Ltd v Datt HC Auckland CIV-2008-404-6676, 16 March 2009 at [16], Westpac

Banking Corp v M M Kembla NZ Ltd [2001] 2 NZLR 298 (CA).

[5] Westpac Banking Corp v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA)

[10]     Bearing those principles in mind, I turn to consider the background to the claims that Mr Taylor seeks to pursue against BNZ in more detail.

[11]     The starting point is the relationship between the Trust and BNZ.  Between

July 2006 and November 2009 the BNZ made the following loans to the Trust:

(a)      housing term loan dated 6 July 2006 in the sum of $230,000, secured over 72A Moresby Avenue, Waihi;

(b)housing term loan dated 30 November 2006 of $25,000, again secured over 72A Moresby Avenue, Waihi;

(c)      housing term loan dated 22 June 2007 of $35,000, secured over 72A Moresby Avenue, Waihi;

(d)housing term loan dated 17 July 2007 of $220,000, secured over the properties at Lot 2 and Lot 4, 24 Walker Street and 72A Moresby Avenue, Waihi;

(e)      housing term loan dated 17 July 2007 for $195,000 secured over the properties at  Lot 2  and  Lot  4, 24 Walker Street, Waihi and 72A Moresby Avenue, Waihi;

(f)       extension of the November 2006 loan of $25,000 for a further year, in

December 2007;

(g)housing term loan dated 5 February 2008 for $50,000, secured over the properties at Lot 2 and Lot 4, Walker Street, and 72A Moresby Avenue, Waihi;

(h)housing  term  loan  dated  25  June  2008  in  the  sum  of  $101,500, secured over properties at 15 Wrigley Street and Lot 2 and Lot 4, 24

Walker Street, Waihi;

(i)extension of the November 2006 loan was extended for a further year, in February 2009;

(j)housing term loan dated 25 November 2009 for $189,000, secured over the property at Lot 2 and Lot 4, 24 Walker Street, and 72A Moresby Avenue, Waihi.

[12]     Each advance was either documented by disclosure documents styled as loan offers that were confirmed and accepted by the trustee, Mr Bogiatto,  (in the case of the  more  substantial  advances)  or  by  diary  notes  (in  the  case  of  the  smaller advances).  Mr Taylor accepts that the above advances were made but says that, in addition, BNZ (through Mr Barclay) agreed to the other two advances between June and September 2008, one for $259,000 and the one for $189,000.  In his submissions to the Court he explained those sums as being calculated as a percentage of the valuations relating to the particular properties.  Mr Taylor is of the view that if the Bank had made the advances to the Trust, the further funding would have enabled the Trust to enhance the values of the properties for the purposes of sale and greater financial return. Instead, the Trust was hampered and has experienced a deteriorating financial position.  He is seeking an assessment of damages.

[13]     Mr Taylor’s evidence about the agreement to make the loans in issue is in very general terms.  Although the current pleadings refer to a date in June 2008, in his affidavit of 22 June 2011, sworn in the first set of proceedings, Mr Taylor deposes that in about August or September 2008 (he is unsure of the precise date) the Trust applied for the two loans in issue.  He says that he met with Mr Barclay and obtained oral approval from him for the advance of $189,000 and conditional approval for the advance of $259,000.  He says there was no request to fill out any loan application forms.   He says that the conditional approval for the advance of

$259,000 only required the supply of a balance sheet for the Trust with particulars of income for the prior two years to demonstrate the ability of the Trust, or Mr Taylor, to service the advance.

[14]     Mr  Barclay  has  sworn  an  affidavit  in  response.    He  does  not  recall  an application  for  $189,000  to  repurchase  the  Moresby  Avenue  property,  or  an

application for $259,000.  Mr Barclay does not recall any meeting with Mr Taylor at which he gave approval to any such lending.

[15]     While it may seem strange that there are no documents Mr Taylor can point to in relation to the agreement to make the advances, Mr Taylor says that is not unusual.   He refers to the affidavit sworn by Mr Bogiatto in which Mr Bogiatto deposes that, to the best of his knowledge, the only occasion on which he was requested  to sign  a loan offer was  in  2007,  for the  advance totalling  $415,000 (comprising the loans of 17 July 2007 for $220,000 and $195,000).    However, Mr Bogiatto is mistaken.   It is apparent from the loan documentation attached to Mr Sherwill’s affidavit that Mr Bogiatto signed disclosure statements (which were expressed in terms of loan offers) in relation to all of the above advances (with the sole exception of the extension of the $25,000 advance in December 2007).

[16]     Some of the offer documents signed by the trustee provided for special terms as a condition of the advance.  For example, in relation to the 17 July 2007 advances, BNZ required the provision of tenancy agreements to confirm rental income for Lot 2, a rental assessment for Lot 4, copies of the project information memorandum and building consents for the proposed development, details of all risk insurance cover and certified copies of agreements for sale and purchase for Lots 2 and 4.

[17]     Nevertheless, if the matter rested solely on the evidence of Mr Taylor and his witnesses, against Mr Barclay’s evidence, summary judgment would not be appropriate, given the apparent conflict.[6]

[6] See above at [9].

[18]   However, there is further relevant evidence, in the form of extensive contemporaneous diary notes held by BNZ.   Given the passage of time, the diary notes are particularly important.  They have been produced to the Court.  They trace and record the dealings between Mr Taylor and BNZ during the relevant period.

[19]     The diary notes for the relevant period disclose the following:

(a)       Diary note by Robert Barclay, 15 May 2008

Amount outstanding:    $625,000.00

Bank security value:     $688,000.00

Warren  Taylor  called  this  morning.     The  following  summarises  our discussion;

*he has a person seriously interested in purchasing 72A Moresby Ave, Waihi @ $260,000 with settlement at the end of the month.  He will leave $60 vendor finance in, which leaves $200k available for debt reduction to BNZ facilities.

*        has spent $25k renovating the 2 flats @ Lot 2, 24 Walker St, Waihi

... He believes the market value is now say $350k.  Flats have been tenanted $ 230 + $260pw.

*        has signed an Agreement to purchase a residential property at 15

Wrigley  St,  Waihi  for  $105k.    GV  $160k.    Mortgagee  Sale. Settlement Date 09/06/08.  Paid a deposit of $10,500 which is yet to

be debited to the a/c.   Land area of 1,782 is subdividable into 3

sections.  Existing house is tenanted @ $200pw. REQUIREMENT

1.Temporary  overdraft  facility  $15,000  is  requested  ...     Facility required until 31 May 08.   Clearance from sale of 72A Moresby Ave, or if contract for sale is not unconditional, Warren Taylor will raise funds from Paul Bravo & repay temporary overdraft.

2.        $94,500 balance required to purchase 15 Wrigley Street, Waihi. COMMITMENT

I recommend approval of a temporary overdraft facility for $15,000 o/a

Moresby Family Trust ... to expire 31/05/08.  ...

No  commitment  given  to  fund  purchase  of  15  Wrigley  Street  until confirmation that sale of 72A Moresby Avenue is unconditional.

(b)      Diary note by Robert Barclay, 5 June 2008

Account 000:   $15,357.44 dr Loan account:   $625,000 dr Security value: $688,000

Details:

Further to diarynote dated 15/05/08 wherein $15,000 temporary overdraft facility was approved to expire 31/05/08.  Clearance to come from sale of

72A Moresby Ave, Waihi.

CURRENT POSITION

Sale of 72A Moresby Ave has become protracted as I have been waiting on the purchaser providing uptodate year and accounts to 31/03/08 which has now been received & loan facility approved.   Settlement date is therefore imminent.

REQUIREMENT

Continuation of $15,000 temporary overdraft for a further say 14 days. ...

[20]     I interpolate here that Mr Taylor had arranged to sell Moresby Ave to his friend  Ms  Atkinson,  and  BNZ  had  agreed  with  her  to  provide  finance  to  the purchaser subject to her providing satisfactory accounts. Subsequent entries record:

(a)      Diary note by Robert Barclay, 24 June 2008

Account 000:   $20,870.46 dr Loan  $625,000 dr Security value: $688,000

CURRENT POSITION

The Trust has entered into an Agreement to sell the residential property at

72A Moresby Avenue, Waihi.   Sale Price $270,000 less vendor finance being  left  in  $155,000  leaves  a  surplus/available  cash  of  $115,000. Settlement Date is expected 27/06/08 & the purchaser is now residing in the property.

Sale proceeds will be applied as follows;

–         repay housing loan for $100,000

–         reduce  temporary  overdraft  facility  by  $15,000  from  $21,000  to

$6,000.    (note  approved  facility  was  for  $15k  &  to  be  repaid following settlement on Moresby Ave – refer diarynote 15/05 &

05/06)

The  Trust  has  entered  into  an  Agreement  to  purchase  a  residential investment property which has been sold via mortgagee sale.   Property is situated at 15 Wrigley St, Waihi.  Land area 2,023m² which is subdivisable into a minimum of 4 lots.  Settlement Date ASAP.  Details of the purchase are as follows:

$105,000 Purchase Price (GV $160,000)

$ 10,500 less deposit paid

$ 94,500 Requirement to settle the purchase

$   7,000 plus to pay residual overdraft balance of $6,000 + provide buffer of

$1,000

$101,500 New Requirement

Total facilities will comprise:

$525,000 existing housing loans

$101,500 new housing loan

$626,500 total housing loans ...

[21]     There was then reference to servicing and securities.  Then:

SPECIAL CONDITIONS

1.        Code Compliance Certificate on Lot 4 24 Walker St to be provided by 11/07/08.  ...

RECOMMENDATION

I  recommend  approval  of  a  Total  Money  variable  rate  home  loan  for

$101,500 in the name of Moresby Family Trust.  ...

(a)      Diary note by Robert Barclay, 23 July 2008

Account 000:   $1,080.38 dr Home loan:  $626,500 dr Security value: $512,000: Warren Taylor telephoned.

A/c overdrawn as detailed above & term loan interest of $3,735 is to be debited to a/c tonight.

Warren advised that at the time of settlement of the Moresby Ave property to

Julie Atkinson, the Bank transferred the total sum of Julies loan proceeds –

$128k to her solicitor who in turn transferred the sum to Warrens solicitor, who then forwarded this to BNZ & debt in the name of Moresby Family Trust reduced.  The sum of $13,000 was made available within the $128,000 loan to Julie, to enable her to repay various creditcard debt.  I said to Warren that this amount would be in his a/c if the Bank had received unnecessary sale proceeds & this amount is not held in the a/c of Moresby Family Trust. Either he has spent it, or it was applied towards debt reduction in the Trusts name

Following  an  investigation,  I  have  confirmed  to  Warren  that  the  Bank released the  mortgage held on Moresby Ave, on the basis of receipt of sufficient funds, to reduce indebtedness to within approved facilities – the

overdraft balance had increased from approx. $15,000 to $20,000 therefore

that’s where $5,000 has been consumed.

Warren advised that financial accounts for the year ended 31 March 2008 are being prepared and will be finalised shortly.  He will then approach us for an increase in loan facilities.

REQUIREMENT

Temporary Overdraft $5,000 o/a ... for a term of 30 days.  ...

(b)      Diary note by Robert Barclay, 15 August 2008

Account 000:    $6,892.01 dr Home loan:      $626,500 dr Security value  $640,000

DETAILS

Warren Taylor telephoned to advise that annual accounts for the Trust are being prepared by Bhavesh Ranchhod of Accounting For Success Limited in Waihi & he anticipates these will be available by the end of the month.

Warren has requested the temporary overdraft facility be increased from

$5,000 to $10,000 to enable payment of wages.

Clearance  will  be  made  from  receipt  of  GST  refund  –  Accounting  For Success have emailed me to advise they anticipate a refund of $11,667 will be payable around the end of the month.

REQUIREMENT

Increase temporary overdraft facility to $10,000 to expire 31/08/08.

(c)      Diary note by Lynne Turton 15 August 2008

Details:

Approved $5000 increase to expire 31/8/08.  ...

No further lending or o/d extensions until 2008 financials to hand & are satisfactory.

(d)      Diary note 10 September 2008 by Robyn Thomas

Account 000:   $3,759.76 dr Home loan: $626,500 dr Security value  $640,000

New warning:  – No overdraft.

[22]     A number of points emerge from the diary notes.  First, where Mr Barclay was prepared to support loans, he made recommendations to his superiors that they be approved.  It is apparent that he did not have authority to make the final decision and to bind BNZ.   Further, Mr Barclay declined to make some of the advances Mr Taylor sought.  Next, it is apparent that the Trust’s financial position was poor from at least May 2008.   At that stage the lending was at approximately 90% of the security value held by BNZ.  Apart from extending overdraft facilities, the only new lending Mr Barclay was prepared to support after that date was on 24 June 2008, when  he  recommended  an  advance  of  $101,500  to  purchase  a  new  property. However, that coincided with the sale of Moresby Avenue.  BNZ was to receive a repayment of $100,000 on its existing housing loan, as well as a reduction of the overdraft of $15,000 from that sale.

[23]     From at least May 2008, it is clear that the Trust’s financial position was deteriorating, to the extent that by August 2008, a note was made that there was to be no further lending.  Later, on 10 September 2008, a warning was put on the account.

[24]     Against that evidence, which is found on the contemporaneous diary notes, it is inconceivable that, at any point between June and August 2008, Mr Barclay would have agreed to commit BNZ to advance a further $189,000 to the Trust, or to advance a further $259,000, even on receipt of further financials.

[25]     Mr Taylor relies on two further items of evidence to support his claim.  First, a bank diary note of 24 November 2009, in which BNZ employee Joy Northcott recorded:

BACKGROUND

Mr Warren Taylor is a builder by trade, and has banked with BNZ for many years.  Moresby Family Trust is his property owning and borrowing entity. Warren is not a Trustee of the trust, and his personal liability is linked to the Trust by way of a personal guarantee.  Sole Trustee of the Trust is Warren Taylor’s Solicitor, George Bogiatto.

Mr Taylor has dealt with Robert Barclay (Mobile Manager) over a number of years.  He builds and also purchases & builds properties and sells them making a profit.   He has conducted his accounts and loans satisfactorily

until December 2008 when a loan approved by BNZ was withdrawn and loans have gone into arrears.  Unfortunately being a builder cashflow is not always regular, and it appears that a decision was made not to fund further, leaving Mr Taylor having to seek funding elsewhere.

It is Mr Taylor’s wish to commence selling down his property portfolio, and to retire in due course. The end result should see him debt free.

PURPOSE

New housing term loan for $189,000 to enable:

1.        Purchase of property at 72A Moresby Avenue, Waihi.   There is a second mortgage on this property to the Moresby Family Trust as current owner is a friend of Mr Taylor, and he left money in the property to enable the friend to purchase it, and live in it.   The friend’s circumstances have changed,  and  she  can no longer  service  her  borrowing.    To  protect  his interest in the property, Mr Taylor wishes to buy out the friend, which will then enable him to fully control the property, and market it for sale immediately.

(emphasis added)

[26]    However, as Mr Sherwill has deposed, that is a record of Mr Taylor’s explanation of the position from his (Mr Taylor’s) point of view, at the meeting in November 2009.   There is no confirmation in any of the contemporaneous bank notes at the relevant time of any withdrawal of an existing commitment to lend. Again, the contemporaneous records from November and December 2008 paint quite a different picture. For example, a diary note of 26 November 2008 authored by BNZ employee Craig Rice, records:

Account 000:    $6,306.85 dr

Home loan:      $626,500 dr

Subject:          No Further Lending

Details:

Warren is applying for further lending to buy a property, refer to previous DN’s.  Warren needed to come up with two yrs financial statements before we would increase any lending.  Have now got two yrs financial statements, I have sent them up the SME to get analysed, the statements show the Moresby Family Trust is running at a loss.  Have worked closely with credit manager, but no further lending will be granted due to financial statements and account conduct is poor.   Warren is not happy with the decision and would like to be contacted by the Branch Manager asap to talk this through.

[27]     Following that there is a further diary note on 29 December  2008 authored by Robert Barclay, noting:

Account 000:     $3,614.83 Dr; Account 002:  $25,045.10 Dr; Home loan:  $601,500:

Subject:          Request for Increase in fac

Details:

I met with Warren Taylor on 17/12/08 at the request of Debbie Symes (Store Manager) & Kaye Robinson (Credit  Manager) to discuss an increase in facilities to the group.  In essence;

– $240,000 required to repay Paul Bravo

– $  40,000 to construct the first unit on Wrigley Street

...

Debt servicing shortfall $24,584 to be serviced from personal income  – advised   as   $65,000   ($20,000   GRI   &   $45k   profit   from   Whiritoa development) = 38%.

Debt servicing ratio 38% is outside allowable guidelines & I have advised

Warren that the Bank is unable to assist in this instance.

File has been returned to Debbie Symes to document rollover of the matured

$25k home loan – 02 a/c.

[28]     Finally, Mr Taylor relies on the evidence of Ms Atkinson.  Ms Atkinson had bought Moresby Avenue from the Trust.  Her financial position changed.  She was not able to keep up the mortgage payments.  She and Mr Taylor agreed she would sell the property back to the Trust.   She stopped making mortgage payments in anticipation of the sale.   Ms Atkinson deposes that around this time she met with manager Heather Brett at BNZ at Waihi, who advised her that the loan to Mr Taylor for the repurchase of the Moresby Avenue property had been approved and would be settled. Ms Atkinson further deposes  that she  returned to BNZ at Waihi on 10

February 2009, where she spoke to Rose Barnett. Ms Atkinson says Ms Barnett also confirmed to her, after contacting the Tauranga branch, that the loan to Mr Taylor was approved but not yet processed.  Ms Atkinson also says that on 2 March 2009 she telephoned Mr Barclay, who said the loan to Mr Taylor was approved and would be settled.  She relies on notes she says she made at the time as a record of those

conversations.   However, the notes she refers to do not support the detail of her evidence.  The handwritten note for 10 February 2009 says:

Please advise loan payment amount & frequency to Mr Warren William

Taylor.

And for the 2 March 2009:

And discuss with Robert Barclay.

[29]     At most the notes confirm that she may have been at BNZ’s branch on those days. Ms Atkinson’s evidence is inconsistent with BNZ’s diary notes, as well as with Mr Taylor’s own evidence, which confirms that some months prior to February and March 2009, in November 2008, he had been told no further loans would be advanced.

[30]     The suggestion that, at a time when Mr Taylor’s existing borrowing from BNZ was close to the security limit, BNZ would make further advances of $259,000 and $189,000 is simply not credible.

[31]     As noted, Mr Taylor cannot give a precise date when he says the agreement to make the advances was made.  The particulars of the alleged oral agreements are also vague.  For example, there are no particulars of the key terms, including interest rates, dates for payments, whether the loans were to be repayable on demand or, if not, the term of the loans.  Against the vague and unparticularised allegations of Mr Taylor, there is a sequence of consistent diary notes containing no suggestion of the arrangement Mr Taylor relies on to support his claim.   The contemporaneous documents confirm that the only loan approved in the period May to December 2008 was the June 2008 advance of $101,500 (which Mr Barclay sought approval for). That loan was made to coincide with the sale of Moresby Avenue to Ms Atkinson, with the consequent expected reduction in BNZ’s exposure.

[32]     In his written submissions, Mr Taylor relies on the course of dealing with Mr Barclay.   But the evidence does not support the particular course of dealing he argues for.   The suggestion that loans would be approved orally without further documentation is inconsistent with the practice disclosed by the diary notes.   The

diary notes establish that all loans prior to the alleged loans were recorded in writing and disclosure/loan offer documents were issued for execution by the Trustee.[7]

[7] With the sole exception of the extension of the $25,000 advance in December 2007, see above at

[15].

[33]     Further, the nature of the subject matter of the alleged agreement is relevant: Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd.[8]    Agreements by banks to make substantial loan advances are generally made in writing.  It is highly unlikely that a bank would intend to be bound to a loan advance in the absence of a formal written offer having been prepared and accepted, as was the case in relation to each of the substantial loans in the present case.

[8] Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd [1981] 2 NZLR 385 (CA).

[34]     Mr Taylor also points to the fact BNZ made the advance of $189,000 in November 2009. In my view, however, that must be seen in the context of the loan being made to address Mr Taylor’s indebtedness at the time by enabling him to repurchase Moresby Avenue at a profit, and to sell down the Trust’s remaining properties, with a view to reducing his overall indebtedness.

[35]     Next, even on Mr Taylor’s own evidence, the loan for $259,000 was always conditional.   It is apparent the conditions were never fulfilled.   Mr Taylor was effectively constrained to accept the same in the course of the Court’s discussion with him.

[36]     For  the  same  reasons,  I  am  satisfied  that  the  claim  under  the  Act  for misleading and/or deceptive conduct cannot succeed.   Two further points can be made in relation to that claim.  First, the non-performance of a promise cannot of itself amount to misleading or deceptive conduct for the purposes of the Act.  For that claim to succeed, the Trust would have to show that Mr Barclay did not intend to perform the promise.[9] That proposition is contrary to both Mr Barclay’s evidence,

and the Trust’s case as presented to the Court.

[9] Laws of New Zealand Consumer Protection (online ed) at [54], citing Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 55 ALR 25 (FCA), decided under the Trade Practices Act

[37]     Next, the cause of action is time barred under s 43(5) of the Act.   Section

43(5) provides:

An application under subsection (1) may be made at any time within 3 years after the date on which the loss or damage, or the likelihood of loss or damage, was discovered or ought reasonably to have been discovered.]

[38]     Mr Taylor was told by BNZ on 26 November 2008 that it would not make any further lending.   Mr Taylor (and through him, the Trust) must have known at that time the Trust would suffer the losses it now seeks to recover as a consequence of that decision.  The present claim was not filed until 16 December 2011, outside the three year statutory period.

[39]     Neither of the causes of action can succeed.   BNZ is entitled to summary judgment.

[40]     In the written submissions prepared on behalf of the Trust, the point is made that the Trust proposes to amend the statement of claim to include a claim in respect of BNZ’s failure to comply with its obligations as mortgagee, in terms of obtaining the best price reasonably obtainable under s 176 of the Property Law Act 2007. However, any claim under that section would be quite separate and distinct to the claims now sought to be advanced in contract and in breach of the Act.   No amendment could save either claim.

Striking out

[41]     In the alternative, even if I am wrong in my analysis that the first cause of action in contract cannot succeed, so that summary judgment for the defendant was not available, there is no answer to the limitation defence under the Act.  That cause of action would be struck out.

Security for costs

[42]     In the circumstances it is strictly unnecessary to consider the application for security for costs.  However, if necessary I would have made an order.  I am satisfied that,  in  those  circumstances,  an  order  for  security  for  costs  would  have  been

appropriate.  The Trust is clearly insolvent.  BNZ has no security remaining for the

$633,014 owing, other than Mr Taylor’s personal guarantee.

[43]     For  the  reasons  given  in  the  previous  security  judgment  an  order  is appropriate.[10]    The issue is quantum. Given the course of the proceedings and the increase in scale, I consider the order should be more than the $17,500 previously ordered.   If necessary I would have ordered security in the sum of $25,000, on a strict timetable.

Costs on this application

[10] Taylor v Bank of New Zealand HC Auckland CIV-2011-404-1842 9 September 2011.

[44]     BNZ is to have the costs on these present applications on a 2B basis.

Venning J

1974 (Australia) which contains similar provisions to those of the New Zealand Fair Trading Act

1986.