Westpac New Zealand Limited v Tee-Wang

[2012] NZHC 368

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2011-409-002351 [2012] NZHC 368

UNDER  the Insolvency Act 2006

IN THE MATTER OF     the Bankruptcy of HYGEIA HUA YU TEE-WANG

BETWEEN  WESTPAC NEW ZEALAND LIMITED Judgment Creditor

ANDHYGEIA HUA YU TEE-WANG Judgment Debtor

Hearing:         6 March 2012

Appearances: C R Vinnell for Judgment Creditor

M I Withers for Judgment Debtor

Judgment:      7 March 2012

RESERVED JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1]      On 1 November 2011 the Judgment Creditor (Westpac) obtained summary judgment  against  the  Judgment  Debtor  (Mrs  Tee-Wang)  in  a  total  sum  of

$386,584.03.

[2]      On 17 November 2011 Westpac issued a bankruptcy notice, as the judgment remained unsatisfied.  On 9 December Mrs Tee-Wang, representing herself, filed a document which the Court has ruled is to be treated as an application to set aside the bankruptcy notice.   It was accompanied by a document signed by Mrs Tee-Wang, headed “Submissions against Bankruptcy Notice”, and a further statement of factual matters in letter form from a Mr Nielsen.  The application to set aside the bankruptcy

notice is opposed.

WESTPAC NEW ZEALAND LIMITED V HYGEIA HUA YU TEE-WANG HC CHCH CIV-2011-409-002351 [7 March 2012]

[3]      Before  issuing  summary  judgment  proceedings  the  Bank  conducted  a mortgagee sale of the property then owned by Mrs Tee-Wang and her husband, Mr Tee, and the proceedings sought judgment for the shortfall between the sale proceeds and their total indebtedness.

[4]      Section 17 of the Insolvency Act 2006 provides that a debtor commits an act of  bankruptcy  if  a  creditor  has  obtained  a  final  judgment  against  the  debtor, execution of it has not been halted by a Court, the debtor has been served with a bankruptcy notice, and the debtor has not within 10 working days of service of the bankruptcy notice complied with its requirements or satisfied the Court that he or she has a cross claim against the creditor.   Subsection (7) provides that cross claim means a counterclaim setoff or cross demand that is equal to or greater than the judgment debt or the amount that the debtor has been ordered to pay, and is also one which the debtor could not use as a defence in the action or proceeding in which the judgment or the order, as the case may be, was obtained.

[5]      The case for Mrs Tee-Wang is that she has a cross claim against Westpac which satisfies both the criteria in subs (7).

The basis and amount of the cross claim

[6]      The  cross  claim  is  based  principally  on  the  manner  in  which  Westpac conducted the mortgagee sale proceedings in relation to the former home of Mr Tee and Mrs Tee-Wang.   I need only refer briefly to one principal element, the presentation to the Bank of an offer for the property by an agent appointed by Mrs Tee-Wang and Mr Tee, in the sum of $645,000, which the Bank declined to accept. Its reason for so doing was that it had received a valuation from DTZ, a registered valuer, which gave a band for a likely sale price under mortgagee sale conditions, the lower parameter of which was $650,000.  Having declined this offer, the Bank went ahead with the mortgagee sale and achieved a sale price of $530,000.   Not surprisingly Mrs Tee-Wang is upset that the earlier offer was not accepted.   This position is exacerbated by the fact that within days of declining the offer, the Bank obtained a marketing assessment from Harcourts which put the upper level of likely price under mortgagee sale conditions at $650,000, so the offer presented would

have been acceptable.   Although Westpac had only one day to consider the offer, close scrutiny of this issue might have resulted in a finding against the Bank on the basis asserted by Mrs Tee-Wang, namely a breach by the Bank of its duty under s 176 of the Property Law Act to conduct a mortgagee sale in such a way that it achieves the best price reasonably attainable for the property.

[7]      However, even if that were the case, the difference in the price achieved and the sum in the declined offer is $115,000.  Allowing as generously as one can, by estimation, for a saving on interest and sales commission, it would seem that this would have only amounted to a cross claim of, perhaps, a maximum of $150,000 or thereabouts.

[8]      Mrs Tee-Wang also maintains that she has a claim against Westpac and its solicitors for the way in which the sale was conducted.   I have reviewed all the evidence before me on this point, both on Mrs Tee-Wang’s behalf and on behalf of Westpac.  I am not satisfied that there is any substance in this complaint.

[9]      It follows, therefore, that the amount of any potential cross claim would be significantly under  half  of  the  amount  now  claimed  by the  Bank.    The  test  in s 17(7)(a) is not met.

Availability of the cross claim in the summary judgment proceeding

[10]     A cross claim on the basis now presented was available to Mr Tee and Mrs Tee-Wang when the summary judgment application was before the Court.   The summary judgment was not opposed.   It appears that Mr Tee and Mrs Tee-Wang were under considerable stress as a result of their financial position, but in the end, not taking available steps in response to the summary judgment should have been seen to inevitably lead to a worse situation.  Apart from being self evident, I also base that observation on the fact that Mr Tee is qualified in both law and accounting and practised in one or both professions.  His dereliction in attending to a timely and available response to the summary judgment action cannot be visited upon Westpac. Sadly, Mr Tee has left the country and his wife and children to return to Malaysia and has participated no further in the unravelling of the financial tangle in which this

couple were placed.   This has left Mrs Tee-Wang to bear the consequences.   But again, that cannot be laid at the feet of Westpac.

[11]     Accordingly, I find that the cross claim which Mrs Tee-Wang maintains she has does not meet the test in s 17(7)(b).

Outcome

[12]     For these reasons the application to set aside the bankruptcy notice must fail. The Bank is entitled to costs on a 2B basis with disbursements fixed by the Registrar.

J G Matthews

Associate Judge

Solicitors:

Anthony Harper Lawyers, PO Box 2646, Christchurch. Email: [email protected]

Murray Withers & Associates, PO Box 13 589, Christchurch 8140. Email: [email protected]

Judgment Debtor – Mrs H H Y Tee-Wang, 51 Weston Road, St Albans, Christchurch.

Email: [email protected]