Trustees Executors Limited v Trustees Executors Limited - [2012] NZHC 650

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-404-4418 [2012] NZHC 650

BETWEEN TRUSTEES EXECUTORS LIMITED First Plaintiff

ANDFOUNDATION CUSTODIANS LIMITED Second Plaintiff

ANDFOUNDATION MORTGAGE SECURITIES LIMITED
Third Plaintiff

ANDTRUSTEES EXECUTORS LIMITED Defendant

Hearing: 13 March 2012

Counsel: P.L. Rice - Counsel for Plaintiff
M.N. McIntosh and F. Mabbett - Counsel for Defendant

Judgment: 4 April 2012

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment of Associate Judge Gendall is delivered on 4 April 2012 at 4.00 pm under r 11.5 of the High Court Rules.

Solicitors: Sanderson Weir, Solicitors, PO Box 856, Shortland Street, Auckland
Russell McVeagh, Solicitors, PO Box 10-214, Wellington

TRUSTEES EXECUTORS LIMITED & ORS V TRUSTEES EXECUTORS LIMITED HC WN CIV-2011-404-
4418 [4 April 2012]

Introduction

[1] This is an application by the defendants for summary judgment concerning a claim over a mortgage lending business relationship. The ultimate issue in this case is who, of the parties involved, had responsibility for procuring lender’s mortgage insurance (“LMI”) for a particular loan that later defaulted. The claim here only arose because the insurer then declined to cover the default because of non- disclosure.

[2] The plaintiffs commenced proceedings against the defendant by filing a statement of claim on 15th July 2011, outlining causes of action in gross negligence and misleading and deceptive conduct. As I have noted, in the application before me, the defendant applies for summary judgment against the plaintiffs, on the basis that none of their causes of action can succeed.

[3] The application is opposed by the plaintiffs. They contend that the Court cannot be satisfied that there is a complete defence to their claims and that the issues require a full hearing and consideration of all the evidence.

Background

[4] The plaintiffs are respectively the trustee, asset custodian and trust manager of the FMS No. 1 Trust (“the Trust”), which carries out business in providing loans and taking security over residential property. The third plaintiff’s duties are set out at paragraph 3 of the Statement of Claim, and include arranging insurance and loan documentation for prospective loans.

[5] By an agreement dated 10 July 2006 (“the Delegation Agreement”), the third plaintiff delegated its duties to the defendant. The defendant is the mortgage management unit of the first plaintiff. In respect of “Credit Assessment and Loan Offer Services”, the Delegation Agreement states that where Approved Mortgage Managers are engaged, those managers will perform these services and the defendant does not need to duplicate performance.

[6] The Delegation Agreement went on to state that the defendant was not liable

for:

(a) Losses suffered in connection with performing its duties, unless the result of gross negligence;

(b) Any indirect, special or consequential damage.

[7] Tasman Mortgages Limited (“Tasman”) was appointed as a mortgage originator and an Approved Mortgage Manager by the third plaintiffs under an “Originator Agreement”, which provided for Tasman to originate loans and to perform certain duties with respect to loan management. The defendant was not party to this agreement.

[8] Around 18 January…

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: [2012] NZHC 650
Decision Date: 4 April 2012

CaseChat Overview and Summary

The High Court of New Zealand was presented with a case involving Trustees Executors Limited, Foundation Custodians Limited, and Foundation Mortgage Securities Limited against Trustees Executors Limited. The plaintiffs, who are the trustee, asset custodian, and trust manager of the FMS No. 1 Trust, initiated proceedings against the defendant for gross negligence and misleading and deceptive conduct. The dispute arises from a mortgage lending business relationship and the responsibility for procuring lender's mortgage insurance for a particular loan that later defaulted. The defendant applied for summary judgment, arguing that the plaintiffs' claims could not succeed.

The court was required to decide whether the defendant's application for summary judgment should be granted. The defendant needed to prove that there was no possible cause of action for gross negligence or misleading and deceptive conduct under the Fair Trading Act 1986. The court considered whether the defendant owed a duty of care in respect of the loan at issue and if the claim under the Fair Trading Act was time-barred.

The court found that there was a reasonable argument that the defendant retained an oversight role, even in respect of loans originated by Tasman. The court also determined that the issue of whether the claim under the Fair Trading Act was time-barred was not appropriately determined on a defendant's summary judgment application. Therefore, the defendant's application for summary judgment was dismissed, and the plaintiffs were awarded costs on a category 2B basis together with disbursements as fixed by the Registrar. The case will proceed to a substantive trial for a full examination of the evidence.

Orders