Westpac New Zealand Limited v Lynn Property Investments Limited HC Tauranga CIV-2011-470-294
[2011] NZHC 1739
•29 November 2011
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
CIV-2011-470-294
BETWEEN WESTPAC NEW ZEALAND LIMITED Plaintiff
ANDLYNN PROPERTY INVESTMENTS LIMITED
First Defendant
ANDMICHELLE LOUISE LYNN AND NEIL ROBERT LYNN
Second Defendants
Hearing: 14 November 2011
Appearances: Ms I Rosic senior counsel and Mr S Pearson junior counsel for plaintiff
M D Branch for defendants
Judgment: 29 November 2011 at 4:00 PM
JUDGMENT OF ASSOCIATE JUDGE DOOGUE
This judgment was delivered by me on
29.11.11 at 4 pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors:
MinterEllisonRuddWatts, P O Box 3798, Auckland [email protected]/ –
Harkness Henry, Private Bag 3077, Hamilton - [email protected]
WESTPAC NEW ZEALAND LIMITED V LYNN PROPERTY INVESTMENTS LIMITED & ORS HC TAU CIV-2011-470-294 29 November 2011
Background
[1] The plaintiff, Westpac New Zealand Ltd (“Westpac”), seeks judgment
against the defendants on a summary judgment application for the sum of
$311,917.92. It is the plaintiff’s case that the first defendant was liable as a principal debtor under the terms of two loan agreements and a mortgage in favour of Westpac. It claims that the second defendants are jointly and severally liable under the terms of an unlimited deed of guarantee of indemnity.
[2] The history of dealings between Westpac and the Lynns extends back to 2003 when a first loan agreement was entered into. In December of that year, the first defendant granted a mortgage securing all present and future advances from Westpac to the first defendant. In the same month, the second defendants executed a deed of guarantee guaranteeing the debts of the first defendant. There were a number of variations to the loan arrangements over the intervening years but the underlying securities, which are the basis for the plaintiff’s claim, remain the same as they were in 2003.
[3] In 2010, the first defendant had got into arrears with its loan arrangements and on 25 June 2010, the defendants made a proposal for the repayment of the arrears which was not acceptable to the plaintiff. That same month the plaintiff made demand on the second defendant for the arrears owing under one of the loan agreements and offered the defendants an opportunity to sell the mortgaged property, an apartment at Mount Maunganui, by 27 August 2010. Nothing came of that proposal and the plaintiff issued demands and served notices pursuant to s 119 of the Property Law Act 2007. The Property Law Act notices served on the defendants expired 31 August 2010 and the plaintiff instructed its solicitors to commence the mortgagee sale process.
[4] Marketing of the property was placed with a real estate company called Ray White, and a Mr Pope from that company’s Mount Maunganui office provided a marketing plan. As will also become apparent later in this judgment, the plaintiff also invited a marketing proposal from another real estate company, Eves Real Estate. The plaintiff’s expectation was that marketing of the property would be
completed over a four-week period and the marketing campaign commenced 1
November 2010. An auction was arranged for 13 November 2010 but the property was passed in. The unsuccessful bidders were Mr and Mrs Fisher who happened to be the managers of the Cutters Cove complex of which the apartment was a part. They followed up their unsuccessful bid at the auction with an offer of $240,000 which the plaintiff accepted by signing an agreement with the Fishers on 9
December 2010.
[5] Prior to marketing the property, the plaintiff had obtained the opinion of a registered valuer who had assessed the forced sale value as being $250,000. I will make further mention of the part that that valuer played in matters later in my judgment.
[6] On 16 January 2011, the plaintiff made demand on the defendants for the shortfall. The demand expired 21 January 2011 without being remedied. On 25
January 2011, Mr Lynn made a complaint to the Real Estate Agents Authority on the real estate agent’s conduct of the mortgagee sale. When that was unsuccessful, he filed an appeal against the Complaints Assessment Committee’s decision with the Real Estate Agents Disciplinary Tribunal.
[7] The issues that arise for determination on this summary judgment application are whether the plaintiff has been able to satisfy the Court that the defendants have no arguable defence to its claim. The notice of opposition filed by the defendants raised the following issues for determination:
(i)whether the debt and associated loan documents were lawfully transferred from Westpac Banking Corporation to Westpac New Zealand Ltd;
(ii)whether Westpac owes a duty of care to the defendants to be satisfied that the valuation it relied upon was reasonable and, if so, whether Westpac breached that duty of care;
(iii) whether Westpac breached its duty of care under s 176 of the Property
Law Act 2007; and
(iv) whether Westpac’s actions have been oppressive under the Credit
Contracts and Consumer Finance Act 2003 (the CCCFA).
The evidence pointing to an arguable defence on s 176 issue
The valuer
[8] Westpac retained the services of a valuer, Mr Davidson, concerning the apartment property. His valuation dated 15 September 2010 estimated the market value at $505,000 but on a forced sale basis $250,000. Mr Davidson’s report followed the usual format and included a section on comparable sales. He noted the favourable location of the property and the fact that the Cutters Cove apartment development had recently had significant upgrading completed “due to weathertight issues, which we understand are now resolved”. He said that in his opinion, the apartment market in general had been oversupplied for a number of years and weathertight issues had become apparent with a number of developments around Mount Maunganui further depressing demand and price levels. He concluded:
Sales evidence indicates apartments within the area selling up to 50% of their original sale/asking prices.
[9] He stated that he was a registered valuer and amongst other things the report had been prepared in accordance with the relevant ethical code and that he had made a personal inspection of the property. He also said that he had experience in the location and category of the property being valued.
[10] In his careful submissions, Mr Branch subjected the valuers report to detailed criticism. He pointed out that Mr Lynn had obtained a valuation from the same valuer in November 2008, which assessed the market value at $560,000 as against
$505,000 in September 2010. The criticisms also included the fact that the property was alleged to have had an income equivalent to a 8 per cent yield (calculated on the basis of the price at which it sold at mortgagee sale).
[11] He contended that the comparable sales information which the valuer relied upon was not truly relevant. Taking into account non-waterfront property transactions, it was suggested, was irrelevant. This property was, as I accept, in a prime waterfront position and it was said that the valuer in taking into account the
prices at which properties set back from the beach were sold was not to the point and that there was a very sharp difference in value between properties on waterfront locations such as Pilot Bay.
[12] Mr Branch said that the bank that had instructed the valuer was responsible for his “negligence”. No authority was provided for this submission and I do not consider that it is correct.
[13] The test that is to be applied under s 176 is whether the bank took reasonable steps to obtain the best price reasonably obtainable for the property at the time it was sold. I do not accept that the bank was required to anticipate in its first affidavits that a defence of a breach of s 176 was likely to be advanced by the defendant and to disclose material on a basis comparable to discovery which would cast doubt upon whether it had met its duty under the section.
[14] The material that the defendants rely upon is essentially that a market proposal had been obtained from another real estate agent, Eves Realty, which mentioned a number of favourable matters that the valuation did not mention, including the income that I have mentioned and other criticisms.
[15] The defendants are essentially saying that the bank, on receiving Eves proposal, ought to have closely examined and analysed Mr Davidson’s valuation and, had they done so, they would have appreciated that it was unsafe to rely upon Mr Davidson’s opinion.
[16] Mr Branch said that it was not good enough for a bank in the position of the plaintiff here to adopt uncritically the comments of a registered valuer. He generally categorised the approach by the employees of the plaintiff as “commercially lazy”.
[17] I do not accept that the circumstances of this case disclose that it was reasonably arguable that the bank was negligent in relying upon the report of Mr Davidson. I should add that what follows does not assume that Mr Davidson was in fact negligent. But even if it is assumed that he was, this does not assist the second defendants.
[18] The reasons that I come to this view are, first of all, that Mr Davidson was a member of a profession which is regulated not only by legislation but also by its own ethical standards. Those who satisfy the necessary statutory criteria to practise as registered valuers must have a minimum of qualifications before they are admitted to the status of registered valuer. The statute by which the work of registered valuers is regulated is the Valuers Act 1948. In common with other professions, practitioners are subject to ethical obligations.
[19] Even if Mr Branch’s criticisms of the valuer in this case can be justified, it needs to be kept in mind that the decision in this case is not about whether or not the valuer was negligent. Rather, the focus is on the requirement of reasonable care on the part of the mortgagee to obtain the best price reasonably obtainable. Even assuming that the duty extends to obligations surrounding the obtaining of an accurate valuation report, there is no basis upon which it can be concluded that Westpac was careless through not observing that there were defects in the valuation report supplied. There is nothing on the face of the report which amounts to a warning that the report may be defective.
[20] In any case, obtaining a valuation report is not obligatory. No doubt it would be prudent for a mortgagee in some circumstances to obtain such a report. But the only relevance such a report would have to meeting the duty imposed by s 176 would come about only where there were some questions about whether the mortgagee had settled for too low a price. That might occur where a property was offered for sale at a set price, but it is difficult to conceive of circumstances that would justify a mortgagee proceeding in this way. In this case, the mortgagee did not. It adopted a competitive process for sale of the property in the form of an auction.
[21] But Mr Branch’s submission really amounted to a two-fold proposition:
a) the valuer estimated the value of the property at too low a price; and
b)the actual return obtained for the property was too low because the property was not marketed properly by the real estate agent.
[22] Presumably the corollary of this argument is as spelt out in the following series of propositions:
a) if the valuer had selected a higher market value then that would have raised question marks about the best price that the agent was able to obtain for the property;
b)as a result, the reserve might have been set at a higher level or the mortgagee might have been motivated to press for a higher price; or
c) as a further result, if a higher reserve coupled with better marketing had occurred, a better price would have been obtained for the property.
[23] The property actually sold at mortgagee sale for a sum of $240,000 on or about 9 December 2010. The price obtained may be compared with the estimated forced sale price of $250,000 which Property Solutions, Registered Valuers, estimated in their report dated 15 September 2010. That is a company to which Mr Davidson belonged. That firm of valuers had in fact been instructed by Mr Lynn to value the property approximately 2 years previously and had then come up with a market value of $560,000 as at the date of the report, 25 November 2008, noting in the course of their report that:
Our above mortgage recommendation is made at 50% instead of our normal
70% of our assessed security value, due to the over supplied apartment market where there is evidence of units, in some instances, selling for 50%
or less [of] their original sale/purchase prices.
[24] The earlier valuation was, of course, provided for the purposes of a borrowing application and not to provide guidance on what the outcome might be at a forced sale.
[25] No evidence was led about trends in the local apartment market and the wider economic circumstances that prevailed from the date of that valuation to the end of
2010 when the property was sold. I would not accept that it is reasonable to assume that there had been a marked upswing in the market in the meantime. In fact, Mr
Davidson’s report indicates that the market value for the property had fallen in the meantime.
[26] Mr Lynn gives evidence that in June of 2010 when he spoke to Westpac bank he told the person that he spoke to that he would be doing his best to sell the property and that the property was “on the market for $545,000”. That would seem to demonstrate Mr Lynn’s conviction that if the property was to sell within a reasonable timeframe, the expectation was that no more than $545,000 would be achieved. It was, of course, the prerogative of the defendants to carry out their own marketing and sale of the property. They had the opportunity to do that between the months of June and December 2010 but they did not achieve the sale.
The real estate agents
[27] The plaintiff also asked two real estate firms to provide marketing proposals. One of these, Ray White Real Estate, said that while it was difficult to estimate the forced sale value for the property, it could be “as low as $300,000 given the lack of interest in apartments”. Ray White Real Estate was eventually given instructions to market the property.
[28] The defendants’ submission that there is an arguable defence rests on the evidence of Mr Lynn and on a marketing proposal for the property which had been submitted to the plaintiff by Eves Real Estate. A real estate agent with that firm, Ms Hayes, submitted a proposal dated 15 September 2010 in which she estimated the current market value of the property to be between $480,000 and $540,000. Her estimate of the forced sale price was between $420,000 and $480,000.
[29] Mr Branch considered that the Eves Real Estate proposal was in all respects superior to that of Ray White and he invited me to embark upon a detailed comparison of the two proposals. He asserted that Eves Real Estate was a large, successful undertaking with considerable presence in the area but that Ray White Real Estate was not in that category. He drew attention to the fact that Ms Hayes described herself in the proposal as having received “REINZ Award of Excellence for Outstanding Achievement in Residential | Population 70,001 & Over” and that she was the “Top Achiever” at Eves Real Estate Mount Maunganui. He viewed Ms
Hayes’ approach as being much more energetic and positive than that of the agent for Ray White Real Estate. He even compared the different sizes of the photographs in the two proposals and noted that the Eves Real Estate commission would have been lower.
[30] I do not agree that it is helpful to embark upon such a comparative exercise. There are a number of reasons for that which will be obvious, but the most compelling is that there is no reason to regard Ray White as being other than a reputable real estate agent. Were that contrary to the case, it would have been open to the defendants to file evidence to that effect. In its absence, I do not propose to conclude that there is an arguable defence that Westpac breached its duties under s
176 by selecting Ray White Real Estate as an agent. I do not consider that the fact that the real estate agent for Eves was much more enthusiastic about the probable price which could be obtained should necessarily be accepted at face value. In suggesting that the different agent could have made all the difference in this case, the defendants are faced with the fact that in the end, following what seems to have been a standard marketing campaign, the property achieved at auction in the vicinity of half of the amount that the other agent said be expected on a forced sale basis.
[31] In summary, the range of figures is:
a) Registered valuer $250,000 b) Ray White $300,000 c) Sales price $240,000 d) Eves Real Estate (median) $450,000
[32] The Eves Real Estate figure is very much the “outlier”,
[33] I conclude by summarising the effect of this evidence. It is implicit in the submissions made for the defendants that Westpac breached its duty of care by failing to obtain a valuation from a competent valuer and by adopting a marketing program which was deficient. The only evidence that supports this point of view is
an inference which I am invited to draw from the fact that the Eves Real Estate agent opined, in a non-sworn marketing proposal, that a much higher figure ought to have been achievable, coupled with assertions by Mr Lynn that inapt comparable sales were pointed to, that the “as new” condition of the refurbished apartments was not emphasised, that the marketing programme was too short and that the marketing effort was further flawed because it did not provide sufficient information as to the earning potential of the apartments. It should not be overlooked that the real estate agent from Eves was hoping to be appointed the agent of the mortgagee when she completed her sales proposal. It may be understandable if she produced an estimate of an expected sales price which might be expected to appeal to the mortgagee.
[34] The Court is required to take a realistic approach when assessing the existence of an arguable defence. The arguable defence here depends upon an inference of fact that, because a much greater sale price could have been obtained than was obtained, the marketing efforts by the plaintiff mortgagee breached s 176. On the basis of the figures that I have set out at paragraph [31] and the fact that, despite the property having been on the market for several months without any sale being obtained, I do not consider that the Court can conclude that this matter ought to go to trial so that an investigation can be conducted into the allegation that there was a breach of the obligation to obtain the best available price reasonably obtainable.
The refusal of leave to file affidavits in reply
Submissions
[35] Mr Branch submitted that I ought to dismiss the application for summary judgment on the additional ground that the second defendants had not been permitted to adduce evidence in rebuttal of the affidavits in reply which the plaintiff filed. I so decided at an earlier stage in the proceedings.
[36] As I understand it, the detail of Mr Branch’s submission in this regard is as follows. In the notice of opposition which the defendants filed, they set out the following grounds:
...
(b) The Plaintiff owes the Defendants a duty of care to be satisfied that the valuation relied upon by it was reasonable, especially given the Plaintiff’s acknowledged policy of not selling at below 95% of the forced sale value.
(c) The Plaintiff breached the duty of care owed to the Defendants, as any reasonably competent debt recovery specialist would have, or should have, realised the valuation was unreliable.
(d) The Plaintiff breached a statutory duty to take reasonable care to obtain the best price reasonably obtainable as at the time of sale.
[37] The key document that the defendants say would have justified the grant of leave to file rebuttal evidence was the Eves Real Estate marketing proposal to which I have made reference.
[38] The usual approach adopted by the Court, and the one that I adopted when the application was originally filed for leave to file rebuttal evidence, was that it was customary for there to be three steps only in the summary judgment evidence process. First, the plaintiff files affidavits which generally negative a defence, but are not required to try and speculate what defences the defendant might wish to raise. I agree with the following statement which is excerpted from McGechan:[1]
While the plaintiff always has the overall onus and must be able to depose to a belief that there is no defence, it is not required to anticipate defences of which it has no notice: Greenbank NZ Ltd v Haas [2000] 3 NZLR 341 (CA).
[1] McGechan on Procedure High Court Rules (online ed) at [HR12.2.05].
[39] I would expect that there could be an exception in cases where, prior to the hearing, the defendant had signalled a defence which arguably could be one of substance. But subject to that, the plaintiff is not required to speculate about defences which the defendant might later raise. At the second stage, the defendant must outline a defence, which is supported by the fact that r 12.9 anticipates that the defendant will file not only a notice of opposition but also an affidavit in answer, which illustrates that the duty on the defendant who has been served with a properly verified statement of claim goes beyond suggesting possible defences for which
there is no evidential foundation.
[40] In his initial affidavit, Mr Lynn raised matters that supported his ground of opposition which was to the effect that the plaintiff mismanaged the mortgagee sale in breach of its obligations.
[41] The bank, in response to that filed an affidavit in which, amongst other things, further information was provided about the marketing proposals that were put forward by the two sets of agents. As a result of the disclosure of the Eves Real Estate proposal, the defendants consider that they have been provided with more evidence supporting their position. Mr Branch submitted that the defendants want to “build on” the matters disclosed in the affidavit filed in reply and in particular, the proposal for marketing the property supplied by Eves Real Estate. The assumption that underlies this argument is that the disclosure of the Eves proposal has either provided further grounds of defence or additional evidence in support of the s 176 ground of defence.
[42] But just because there has been a disclosure of something that the defendants did not previously know about, the contents of the Eves report, it does not follow that there is additional evidence which the defendants would wish to put forward to supplement their original affidavit. Further, at the time when leave was sought to file further affidavits and to this day, the defendants have not indicated what the further evidence that they would wish to file is. What we do know is that in his original affidavit, Mr Lynn made extensive reference to a complaint that he had made about the conduct of the Ray White agent, Mr Pope, to the Real Estate Agents Authority. A Complaints Assessment Committee decided that the Lynns complaint should not be investigated further. During the complaints process, Mr Pope apparently wrote a letter of response which the Lynns considered should be placed before the Court on this application, expressed their view that they were not free to do so and suggested that Westpac ought to provide that information. So far as I am aware, Westpac has not in fact provided that information.
[43] That in essence is the grounds for the application to file an affidavit in rebuttal.
Discussion
[44] My conclusion is and was that it was always open to the defendants to obtain their own evidence concerning the allegations of breach of mortgagee’s duty. Their case is not one that falls into the exceptional category in which discovery is ordered on a summary judgment application.
[45] The views that were expressed in the Eves report were the views of one real estate agent about the likely market value for the Lynns’ property at a mortgagee sale. It was always open to the Lynns, if they wished to obtain other evidence from other land agents or from a valuer, to do that. The proper time to have that evidence available and to file it was when they filed their affidavits in support of their notice of opposition. The disclosure of the Eves report by the plaintiffs in their affidavits in reply does not on its own justify permitting a rebuttal affidavit from the Lynns.
[46] So far as the detail of how Mr Pope conducted himself as an agent in this case is concerned, that is not the matter that is in issue when the Court is considering a s 176 enquiry. The only question that the Court has to consider is whether the appointment of Ray White Real Estate was, in the first place, a responsible decision to make. Of course, if some information had come to hand after the appointment which was suggestive of malpractice or disregard of the mortgagors’ interests and rights in the course of marketing the property for sale, it may have been the case that the bank would have to review the appointment. But in all the circumstances, the bank was required to act reasonably. Whatever the defendants think about the adequacy of Mr Pope’s marketing efforts in retrospect, it is difficult to see that they could have anything but a tangential relevance to the reasonableness of the bank’s conduct in entrusting Ray White and Mr Pope with the marketing of the property.
[47] It is fair to say that nothing has changed since the need for rebuttal evidence was explained to me in the first instance that would suggest a different outcome from the initial application which I declined should follow. Nor has there been any procedural unfairness to the Lynns which would make it unsafe for summary judgment to be entered against them.
Was there an effective assignment of the loan and accompanying rights to the plaintiff?
[48] In the notice of opposition at paragraph 3(a), a ground on which the defendants opposed summary judgment was set out as follows:
(a) There is no evidence that the debt and associated loan documents have been lawfully transferred from Westpac Banking Corporation to the Plaintiff.
[49] The defendant did not offer any evidence in support of its ground of defence
3(a).
[50] The contracts with the defendants were made with Westpac Banking Corporation in the first instance and accordingly the contractual rights under the loan and the guarantee would appear to have belonged to Westpac Banking Corporation in the first instance. On 13 September 2006, the Westpac New Zealand Act 2006 provided for the vesting of certain assets and liabilities of Westpac Banking Corporation in Westpac New Zealand Ltd in order to comply with the Reserve Bank
of New Zealand’s local incorporation policy.[2] The contractual rights in this case,
however, arose before 2006.
[2] Westpac New Zealand Act 2006, s 3(a).
[51] There was a further transaction entered into on 6 May 2009, but it was a loan variation. It increased the amount of credit, amongst other things, as the chronology indicates. Execution of that variation by its nature did not have the effect of replacing the pre-2006 contracts.
[52] The following chronology will be helpful in order to understand the
defendants’ argument:
02/12/2003 Westpac and Lynn Property Investments enter into the First Loan Agreement.
02/12/2003 Lynn Property Investments grants Westpac the Mortgage over the Mortgaged Property securing all present and future advances to Lynn Property Investments’ by Westpac.
08/12/2003 Mr and Mrs Lynn execute a Deed of Guarantee and Indemnity guaranteeing all money and obligations owing to Westpac by Lynn Property Investments.
18/06/2004 Westpac and Lynn Property Investments enter into the Second Loan Agreement.
06/05/2009 Westpac and Lynn Property Investments enter into a Loan Variation Agreement which varies the terms of the First Loan Agreement by (among other things) increasing the amount of credit available from $245,800 to $510,000.
[53] In the plaintiff’s statement of claim it was pleaded:
It is a company duly incorporated in New Zealand and having its principal place of business at 188 Quay Street, Auckland. It carries on business there and elsewhere in New Zealand as a Bank. The plaintiff is the recipient of certain assets and liabilities of Westpac Banking Corporation pursuant to the provisions of the Westpac New Zealand Limited (sic) Act 2006.
[54] The plaintiff in the usual way verified its statement of claim as being correct. The verifying affidavit was sworn by Rosemarie Barrett, a manager for Westpac, who said that she confirmed to the best of her knowledge that the matters set out in the statement of claim are true and correct. I add for the sake of clarity that I understand that the plaintiff does not claim to rely on an express assignment of the contractual rights that it has against the second defendants. Its case rests entirely on the proposition that those rights were assigned by operation of the Westpac New Zealand Act which came into effect on 13 September 2006. That statute referred to “Westpac New Zealand” which was defined under s 4 as a company having the name “Westpac New Zealand Limited”, which is the plaintiff.
[55] Mr Branch submitted that there was no proof that the rights by which the guarantee which is sued upon in this case was in fact transferred from Westpac Banking Corporation to Westpac New Zealand Ltd. Mr Branch said the vesting of designated assets under the Act occurred, if it occurred at all, as a result of Part 2 of the Act being complied with. That required the Governor-General under s 6 to approve a proposal to vest designated assets and liabilities. There is no proof that that has occurred, Mr Branch submitted. It is correct that the evidence offered by the
plaintiff does not give any evidence that there has been an approval of vesting of designated assets and liabilities by the Governor-General. Such an approval is required under s 8 to effect vesting of designated assets and liabilities.
Discussion
[56] The question that arises in this part of my judgment is if the verification in the affidavit in support of the statement of claim is sufficient to negative a defence that there has not been an effective transfer of the loan and associated guarantee from the earlier Westpac entity to the later.
[57] There is no evidence offered that the vesting under Part 2 did not take place. If the averment in Ms Barrett’s affidavit is insufficient to negative the existence of an arguable defence, it may well be that the plaintiff does not have the required proof because there may be difficulty in relying upon the presumptions in ss 16(2) and (6) of the Westpac New Zealand Act.
[58] The statement by Ms Barrett can be read as containing a compound assertion which, in expanded form, means that what was required to be done under the Act was done in order to transfer the rights that Westpac Banking Corporation had to Westpac New Zealand Ltd. A detailed explanation of the basis for the plaintiff’s deponent’s knowledge is not required.
[59] The issue is whether on a fair consideration of the affidavit material there is an arguable defence available to the defendant. In my judgment the matter is covered by the statement of Greig J in Australian Guarantee Corp (NZ) Ltd:[3]
[3] Australian Guarantee Corp (NZ) Ltd v McBeth [1992] 3 NZLR 54 (CA) at 58.
The summary judgment procedure is a simple expeditious way to enable a plaintiff to obtain judgment where there is no real defence to the claim made: see Pemberton v Chappell [1987] 1 NZLR 1 at p 2. The essence of the procedure is the plaintiff’s own verification by affidavit of his own statement of claim and the allegations made in it: Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21. There has to be a balancing between the right of the defendant to have his day in Court and to have his proper defences explored and the appropriate robust and realistic approach called for by the particular facts of the case: see Bilby Dimock Corporation Ltd v Patel (1987) 1 PRNZ 84 and Cegami Investments Ltd v AMP Financial Corporation (NZ) Ltd [1990] 2 NZLR 308 at p 313.
Although the onus is upon the plaintiff there is upon the defendant a need to provide some evidential foundation for the defences which are raised. If not, the plaintiff’s verification stands unchallenged and ought to be accepted unless it is patently wrong.
[60] My conclusion is that because the affidavit filed by the plaintiff stands unchallenged, there is no defence available to the second defendants based upon an alleged absence of an assignment of the rights of action.
[61] For these reasons I do not consider that the defendants have an arguable defence to the effect that the statutory assignment of the rights of action has not been proved.
The Credit Contracts and Consumer Finance Act 2003
[62] The final matter that I deal with is the assertion of the defendants that the plaintiff behaved in an oppressive manner and that the transaction should be reopened for the Court’s consideration pursuant to s 120 of the CCCFA.
[63] Section 2(2) of that Act provides that the Act comes into force on 1 April
2005 (subject to specific parts relating to land buy-back transactions, which came into force earlier).
[64] The loans and guarantees here were made between December 2003 and June
2004. The loan variation agreement in 2009 merely increased the credit limit and
does not mean it could be said that the underlying loan agreement was “made” after
2005.
[65] In that case, the correct legislation to be applied is the Credit Contracts Act
1981.
[66] The onus of establishing oppressive conduct lies on the party asserting it, and evidence is required to support the assertion.
[67] At [80] of the plaintiff’s submissions, they set out the defendants’ allegations
of oppression as:
a) Westpac refused to vary the terms of the Loan Agreements to interest only;
and
b) The mortgagee sale process was oppressive.
Refusal to vary terms
[68] There is no express reference in the defendants’ submissions to this point but I understand that the plaintiff is criticised in the defendants’ evidence for its refusal to vary the terms of the loan agreement to interest only. In essence, the claim is that the bank in accordance with the reasonable standards of commercial practice ought to have agreed to vary the contract to an interest only one. No evidence is provided as to what those reasonable standards of commercial practice called for in the circumstances. A suggestion that a failure to agree to a variation of a financing contract to make it more favourable to the interests of the borrower which is unsupported by any evidence cannot give rise to an arguable defence that the conduct of the bank was oppressive.
[69] The same comment can be made about the other apparent basis upon which oppressiveness rests, that Westpac should have delayed exercising its power of sale.
[70] Westpac claims that it provided the defendant with a number of opportunities to remedy the default, including allowing the defendants to sell the property between June 2010–August 2011.
[71] In the absence of evidence on this point or more detailed submissions by the defendant, I cannot find anything that might support a finding that there is a reasonably arguable case that the contracts were oppressive.
Sale process
[72] At [14] and [45] of the defendants’ submission, they rely on the same arguments for oppression as for the alleged breach of the s 176 duty. It seems that the arguments for oppression must fail for the same reasons.
Result
[73] For the reasons I have given, I do not consider that the defendants have shown that they have a reasonably arguable defence to the plaintiff’s claim. I accordingly enter summary judgment for the plaintiff for the sum of $311,917.92.
[74] Counsel should confer on the matter of costs and if they are unable to resolve that issue by agreement I shall give further directions.
J.P. Doogue
Associate Judge
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