Westpac New Zealand Limited v Armitage

[2013] NZHC 1798

`

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-001366 [2013] NZHC 1798

BETWEEN  WESTPAC NEW ZEALAND LIMITED Plaintiff

ANDDUNCAN BRUCE ARMITAGE First Defendant

HERBERT BRUCE ARMITAGE Second Defendant

Hearing:                   16 July 2013

Appearances:           N Maday for Plaintiff

S W M Piggin for Defendants

Judgment:                16 July 2013

ORAL JUDGMENT OF VENNING J

Solicitors:           Minter Ellison Rudd Watts, Auckland

Copy to:            S W M Piggin, Auckland

WESTPAC NEW ZEALAND LTD v ARMITAGE [2013] NZHC 1798 [16 July 2013]

[1]      The   plaintiff   Bank’s   application   for   summary   judgment   against   the defendants was met by an appearance under protest to jurisdiction.  The Bank then applied for orders setting aside the defendants’ appearance under protest to jurisdiction.  That matter was to proceed to hearing on 1 July 2013.   However, in advance of that hearing, counsel for the defendants filed a memorandum advising he was instructed by the defendants to take no further steps in respect of the protest nor in respect of defending the summary judgment application.  On that basis the fixture was vacated and the matter returned to call in the list this afternoon.

[2]      The plaintiff seeks summary judgment.   Mr Piggin has confirmed that his instructions remain as recorded above.

[3]      Before addressing the application for summary judgment I briefly refer to the protest to jurisdiction as the matter is referred to on the Court file.

[4]      In short the defendants protest to the Court’s jurisdiction  is based on an alleged failure of the Bank to comply with the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the Act) and the Banking Ombudsman Scheme under that Act.

[5]      In short, the Act requires financial services providers, such as banks like the plaintiff, to be registered and be members of a dispute resolution scheme if they provide financial services to retail clients.  For present purposes the defendants could be described as retail clients.

[6]      The Bank is also a member of the New Zealand Bankers’ Association.  That Association prepares and maintains a code of Banking Practice.   The Code itself, however, does not form part of the contractual relationship between the Bank and its customers.

[7]      Further, the Bank like other major trading banks is a member of the Banking Ombudsman Scheme in fulfilment of its obligations under the Act.   Under that scheme  the  Office  of  the  Banking  Ombudsman  functions  as  an  independent

investigator of complaints filed by customers of the Bank in relation to breaches of contract, statute or the Code of Banking Practice.

[8]      The Banking Ombudsman’s terms of reference sets out the rules that the Ombudsman must follow when investigating a complaint by a customer of the Bank. It also sets out the rules that the Bank and other participants must adhere to once a complaint is being investigated by the Ombudsman.

[9]      Relevantly for present purposes, in relation to the commencement of legal proceedings, the terms of reference at 14 state:

While a complaint is being considered by the Banking Ombudsman, a Participant must not begin legal proceedings against the Complainant that relate to the subject matter of the complaint unless the Participant has first:

obtained   the   consent   of   its   chief   executive   to   begin   legal proceedings, and

advised  the  Banking  Ombudsman  that  it  intends  to  begin  legal proceedings, (and, if practical, has given the Banking Ombudsman at least 5 working days’ notice of that intention).

[10]    It is the Bank’s submission that while paragraph 14 imposes a negative obligation on Westpac not to commence legal proceedings while a complaint is being investigated, (unless the pre-requisites are satisfied) it does not purport to provide exclusive jurisdiction on the Ombudsman to hear and determine disputes between the Bank and its customers.  Nor does it require the Bank to defer commencing legal proceedings or other recovery action where a complainant intends to bring a complaint, but before the complaint is brought.

[11]     As counsel submits, importantly it is up to the Ombudsman to decide whether a complaint falls within his or her terms of reference.

[12]     The  defendants  in  this  case  purported  to  make  a  complaint  to  the Ombudsman.  The Bank accepts that once the defendants lodged the complaint with the Ombudsman and the Ombudsman notified the Bank of the investigation the Bank was obligated under s 49F of the Act and the Ombudsman’s terms of reference to not

commence   proceedings   while   the   complaint   was   being   considered   by   the

Ombudsman.

[13]     However,  the  short  point  is  that  the  Bank  did  not  commence  legal proceedings until these summary judgment proceedings were filed on 15 March

2013.   On that day the Banking Ombudsman had advised the Bank that she had completed her investigation of the complaint and considered she did not have jurisdiction to entertain it.  In the circumstances it was open to the Bank to proceed with the current proceedings, even taking the most favourable interpretation of the Act, the terms of reference and code to the defendants’ benefit.

[14]     In the circumstances it is unnecessary to consider the alternative arguments advanced by the Bank that jurisdiction is not otherwise excluded.   It is better that those matters be dealt with when the matter is more fully argued.

[15]     I am satisfied that on the factual evidence before this Court that the Bank was entitled to issue these summary judgment proceedings when it did.  For that reason there is no merit in the protest to jurisdiction.

[16]     As noted in any event Mr Piggin no longer holds instructions to pursue the protest or to oppose the application for summary judgment.

[17]     The Bank seeks summary judgment.  Having reviewed the evidence before the Court I am satisfied that there is no arguable defence to the claim brought by the Bank against the defendants.

[18]     There will be judgment for the Bank:

(a)       in the principal sum claimed in the statement of claim of $179,224.04; (b)     interest on that sum at the contractual rate from 20 November 2012

until today $13,135.22;

(c)       costs and disbursements on a full indemnity basis in accordance with the evidence of Mr Harrop of $21,566.01;

(d)costs  and  disbursements  on  a  2B  basis  for  this  and  associated appearances of $846.00;

in total $214,771.27.   In addition, in accordance with the defendants’ obligations under the mortgage, interest on the judgment sum is to continue to accrue at the plaintiff’s default interest rate of 11.24 per cent per annum from the date of judgment

until payment.

Venning J