Westpac New Zealand Limited v Wellpark Trading (Hamilton) Limited

[2013] NZHC 2600

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-002538 [2013] NZHC 2600

UNDER  Part 12 of the High Court Rules

IN THE MATTER OF       an application for summary judgment

BETWEEN  WESTPAC NEW ZEALAND LIMITED Plaintiff

ANDWELLPARK TRADING (HAMILTON) LIMITED

First Defendant

STUART FRANCIS CLARKE Second Defendant

Hearing:                   7 October 2013

Appearances:           F M Kirkcaldie for Plaintiff

A L Credin for Defendants (granted leave to withdraw) No apppearance for Defendants

Judgment:                7 October 2013

ORAL JUDGMENT OF VENNING J

Solicitors:           Simpson Grierson, Auckland

Grove Darlow & Partners, Auckland

WESTPAC NZ LTD v WELLPARK TRADING (HAMILTON) LTD [2013] NZHC 2600 [7 October 2013]

Introduction

[1]      This is an application for summary judgment.  The Bank seeks judgment for the shortfall following mortgagee sale.  The application was formally opposed and solicitors instructed for the defendants.  The defences raised were that, in exercising its power of sale, the Bank had acted in breach of an agreement to allow the defendants to sell the property, particularly the property known as the Inverness property, themselves and as a result, and in addition, the Bank had breached its statutory duty under s 176 of the Property Law Act 2007 to obtain the best price reasonably obtainable.

[2]      The case was allocated a fixture for this morning.  The defendants have failed to file and serve submissions as directed by the Court.   Counsel has appeared on behalf of the defendants this morning to advise her firm is without instructions.  The defendants have been called outside the Court.  There is no appearance on behalf of the defendants in person.

[3]      Having  reviewed  the  papers  I  am  satisfied  that  it  is  appropriate  for  the application for summary judgment to proceed and the matter be heard this morning.

Background

[4]      In summary, the relevant facts are that in November 2010 the Bank agreed to advance funds to the first defendant’s account.   The second defendant guaranteed those advances.  In addition the Bank took security over two properties known as the Victoria property and the Inverness property.

[5]      The first defendant fell into arrears and defaulted under its obligations to the

Bank in about mid 2012.  The Bank issued Property Law Act notices on or about 25

July 2012.   The notices expired unremedied.   The Bank then took steps towards exercising its right of mortgagee sale in relation to both properties.

[6]      Before the sale marketing commenced, there were discussions between the Bank and the second defendant concerning repayment of the arrears and whether the Bank might permit the defendants to market and sell the properties themselves.  The

Bank took the view there was no concluded agreement and proceeded to mortgagee sale.

[7]      Ultimately the properties were sold at mortgagee sale.  Following settlement of the sales of the properties in March 2013 and application of the net sale proceeds of sale to the account there is the shortfall for which the Bank now seeks judgment against the first defendant as principal debtor and the second defendant as guarantor.

Principles

[8]      The principles in relation to summary judgment are well settled and were recently referred to by the Court of Appeal in Krukziener v Hanover Finance Ltd.1

Decision

[9]      In relation to the first defence that the Bank was in some way estopped from proceeding to a mortgagee sale because of an agreement with the defendants to permit them to market the properties, the evidence does not establish that there was any such binding agreement.

[10]     It is clear from the evidence of Mr Cullingford in support of the plaintiff’s application, and the contemporaneous correspondence at the time, that the Bank did no more than offer to consider deferring mortgagee sale action for a limited period on a number of terms.  The terms included the defendants forwarding a copy of the listing agreements, the arrears to be cleared by certain dates, that the defendants or their agents provide regular marketing reports and that Council rates and insurances for both properties be kept up to date.

[11]     There is no  evidence that those  conditions were complied with.   To  the contrary the evidence of Mr Cullingford is that those conditions were not complied with.  No marketing reports were forwarded and the interest payments were not kept up to date. The first ground of defence must fail.

[12]     The  second  ground  of  defence  that  the  Bank  failed  to  comply  with  its obligations  under  s 176  of  the  Property  Law Act  must  also  fail.    The  leading authority in relation to the Bank’s obligation under that section is Public Trust v Ottow.2

[13]     Having  regard  to  the  steps  the  Bank  took  in  this  case  it  satisfied  the obligation on it.  The Bank placed the properties for sale with a reputable real estate agent.  It obtained two appraisals prior to sale and then valuations prior to sale.  It marketed the properties, the Inverness property in particular for four weeks.  There was an extensive and comprehensive marketing campaign for the Inverness property and  the  property  was  ultimately  sold  following  auction.    The  sale  prices  are consistent with the valuation advice the Bank received.  For example, the Inverness property sold for $561,000.   That was $11,000 above the reserve the Bank had placed on it.   The Bank had received valuations confirming the market value of

$640,000 and a forced sale value of $523,000.  In relation to the Victoria property the Bank had received a valuation of $197,000 for market and $153,000 on a forced sale exercise.  The Victoria property was sold for $205,000.   On the evidence the Bank satisfied its obligations under s 176 of the Property Law Act.   That defence must also fail.

Result

[14]     There is no arguable defence to the Bank’s claim.  The Bank is entitled to the

judgment it seeks.

[15]     There will be summary judgment for the Bank against both defendants jointly and severally for the sum of $290,720.37 together with interest in accordance with the loan documentation to today’s date of $17,892.58.

[16]     In addition there will be an order that the defendants are to pay interest on the judgment sum at 11.24 per cent per annum compounding monthly from the judgment until payment.

[17]     The Bank is also entitled to costs of $12,139 together with disbursements of

$1,492, in total $13,631.00.

Venning J