Westpac New Zealand Ltd v Lamb

[2012] NZHC 319

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2011-404-005066 [2012] NZHC 319

UNDER  part 12 of the High Court Rules

IN THE MATTER OF     an application for summary judgment

BETWEEN  WESTPAC NEW ZEALAND LIMITED Plaintiff

ANDJOHN WARWICK LAMB AND LESLIE JENNIFER LAMB Defendants

Hearing:         24 February 2012

Counsel:         L Lim for the Plaintiff

Defendants in Person

Judgment:      1 March 2012

[RESERVED] JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie

On 1 March 2012 at 2.00 pm

Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Distribution:

L Lim: [email protected]

JW and LJ Lamb: [email protected]

WESTPAC NEW ZEALAND LIMITED V LAMB & ANOR HC AK CIV 2011-404-005066 [1 March 2012]

Introduction

[1]      The plaintiff, Westpac New Zealand Limited (―Westpac‖), seeks summary judgment against the defendants, Mr and Mrs Lamb.  It says that the amount owing to it by the defendants is $345,060.61.  It seeks judgment in the sum of $346,324.36 (being the amount owing together with interest until 23 June 2011), interest on the sum of $345,060.61 at the rate of 11.24 per cent per annum and compounding on the tenth day of every month from 24 June 2011 until the date of judgment, and interest on the same basis from the date of judgment until the date of actual payment.  It also seeks its costs on a solicitor–client basis.

[2]      Mr and Mrs Lamb oppose Westpac’s application.  They assert that they have a defence to its claim.  They do not dispute that there is a debt owing to Westpac. Rather, they allege that Westpac, as mortgagee, breached the duty of reasonable care owed under s 176 of the Property Law Act 2007, to obtain the best prices reasonably obtainable as at the time of sale, when it sold under its power of sale properties at

51/17 Georgia Terrace, 63/17 Georgia Terrace, 5/26 Roanoke Way, and 22 Wicklam

Lane.

[3]      Westpac  denies  that  the  defendants  can  establish  a  proper  foundation  to support their argument that it breached its duty under s 176.   It asserts that the evidence is clear that it took reasonable care to obtain the best prices reasonably obtainable at the time of sale of each of the properties.

Background

[4]      At all relevant times Mr and Mrs Lamb were directors of a company called

Lambfamsa Limited.   They were the shareholders of Lambfamsa until 15 March

2011 when Mr Lamb transferred all of his shares in the company to Mrs Lamb.

[5]      The Lambs and Lambfamsa gave Westpac a cross-guarantee to secure all of their respective debts, liabilities and obligations to Westpac.   The cross-guarantee was  dated  15  November  2006.     Pursuant  to  the  guarantee,  the  Lambs  and Lambfamsa, all as cross-guarantors, guaranteed the payment of all money that each

of the other cross-guarantors might at any time owe to Westpac.  Each agreed to pay the guaranteed money on written demand from Westpac, and each agreed to pay Westpac interest on all money that it demanded under the guarantee, including on interest  owed  by the original  debtor.    Interest  on  the amount  owing was  to  be calculated from the date when Westpac demanded that amount, on the daily balance of the amount still unpaid.  It was to be calculated at the same rate that applied to the guaranteed money, or if there was no such rate, at Westpac’s certified indicator lending  rate,  or  the  rate Westpac  substituted  for  its  indicator  lending  rate,  plus Westpac’s then current margin for similar accounts from time to time.  Interest was payable both before and after judgment.  The cross-guarantors were also required to pay all costs and liabilities that Westpac might incur in enforcing the guarantee or any security. This included legal fees on a full indemnity basis.

[6]      Westpac  made  various  advances  to  Mr  and  Mrs  Lamb,  and  also  to Lambfamsa.   This proceeding concerns a loan of $460,000 made by Westpac to Lambfamsa’s loan account on 8 June 2007.  Inter alia, the loan agreement in respect of that loan provided that interest was to accrue and be calculated daily on the debit balance of the account, and that interest was to be debited monthly on the tenth day of each month, being the monthly anniversary of the drawdown date.  Interest was to be fixed at the rate of 8.75 per cent for five years from the drawdown date.  The annual rate of interest thereafter was to be as determined by Westpac from time to time.    This  was  referred  to  as  the  floating  rate.    Lambfamsa  was  required  to reimburse Westpac on demand, on a full indemnity basis, for all collection agency costs and expenses Westpac incurred if a payment became overdue.

[7]      In addition to the cross-guarantee, Lambfamsa gave mortgages to Westpac over the following properties:

(a)       51/17 Georgia Terrace, Albany;

(b)      63/17 Georgia Terrace, Albany, and

(c)       5/26 Roanoke Way, Albany.

Mr and Mrs Lamb gave Westpac a mortgage over their family house at 22 Wicklam

Lane, Greenhithe.

[8]      Lambfamsa defaulted on its loan repayment obligations to Westpac in April

2009.   Mr and Mrs Lamb also intermittently defaulted on their personal loan obligations from about the same time.

[9]      On 10 August 2009, Mr and Mrs Lamb advised Westpac that there had been a change in their personal circumstances and that their income had been reduced.  On

17 August 2009, a Westpac Bank officer sought further information, but this was not provided.  The defaults continued and Westpac sent demands to Mr and Mrs Lamb and Lambfamsa on 12 May 2010 for the arrears then outstanding.

[10]     In response to the demands, Mr and Mrs Lamb emailed Westpac on 21 May

2010 advising that they and Lambfamsa were attempting to sell the Georgia Terrace units and the unit at Roanoke Way.  Westpac agreed to take no further action until

6 August 2010 to allow the marketing by Mr and Mrs Lamb and Lambfamsa to progress.

[11]     In the interim, Westpac required valuations from registered valuers for the secured properties.  Mr Lamb suggested that Westpac should use Barker and Morse Limited, a valuation firm based on the North Shore.   That firm had previously assisted him.   Westpac agreed to this, and requested that the valuations be sent directly to it.

[12]     Barker and Morse prepared valuations for each of the secured properties on

2 August 2010. They were addressed to Westpac and were sent to it.

[13]     Lambfamsa was unable to sell the Georgia Terrace units and the unit at

Roanoke Way by 6 August 2010.

[14]     The parties met on or about 15 September 2010 in an attempt to resolve matters, but no agreement could be reached.   Westpac then served the requisite notices under ss 119 and 122 of the Property Law Act on Mr and Mrs Lamb and

Lambfamsa.  The defaults specified in the notices were not remedied, and Westpac took steps to appoint agents — Barfoot and Thompson — to market and sell the secured  properties.    During  the  course  of  a  marketing  campaign  conducted  by Barfoot and Thompson on Westpac’s behalf, the Lambs wrote to Westpac expressing dissatisfaction with the sale process.   Westpac  responded.    It suggested  various options that might be open to the Lambs.   Inter alia, it suggested that they should seek independent legal advice and/or refinance the debt owing to Westpac.

[15]     The auctions of the Georgia Terrace units and  the unit at Roanoke Way proceeded on 9 February 2011.  Westpac set reserves on each of the properties.  All three were passed in below reserve, with no bids being received for either of the Georgia Terrace units.   Following post auction negotiations, Westpac accepted the best offers received and sold the properties as follows:

(a)      51/17 Georgia Terrace:  $350,000; (b)      63/17 Georgia Terrace:  $300,000; (c)      5/26 Roanoke Way:  $300,000

[16]     In February 2011, Mr and Mrs Lamb wrote to Westpac criticising the sale prices obtained.  Inter alia, their letter recorded that they were aware that one of the Georgia Terrace  units  —  unit  63  —  had  ―some serious  leaky problems‖.    The defendants accused Westpac of being ―nothing but lying conniving thieves‖.

[17]     The sales settled on 8 March 2011 and 21 March 2011.  Westpac credited the

net sale proceeds towards Lambfamsa’s indebtedness to it.

[18]     Also  in  March  2011,  Westpac  commenced  marketing  the Wicklam  Lane property through Barfoot and Thompson with a view to selling it at auction on

13 April 2011.

[19]     On 8 April 2011, the Lambs wrote to Westpac, advising of a recent change in their  circumstances.    Westpac  requested  further  information  about  Mr  and  Mrs Lamb’s financial position, and agreed to defer the auction of the Wicklam Lane

property for a two-week period so that it could complete the necessary debt servicing assessments, and advise if the Lambs’ debt to it could be restructured, or in the alternative, to enable the Lambs to obtain refinancing from another lender.

[20]     On 13 April 2011, Westpac sent e-mails to the Lambs advising that it was unable to approve a loan restructure, because they did not meet its lending criteria.  It again invited them to seek alternative financing, and advised that it would agree to release its mortgage over Wicklam Lane if they could repay 95 per cent of their total indebtedness to Westpac.

[21]     Over this period, marketing of the Wicklam Lane property continued with a view to selling it at a new auction date on 26 April 2011.

[22]     On  26  April  2011,  the  Lambs  wrote  again  to  Westpac  raising  a  new complaint, namely breach of various provisions contained in the Credit Contracts and Consumer Finance Act 2003.  The Lambs also asked Westpac to allow them six months to sell Wicklam Lane themselves.

[23]     Westpac deferred the proposed auction to enable it to obtain advice, and it halted its marketing campaign.

[24]     On 12 May 2011, Westpac’s solicitors wrote to Mr and Mrs Lamb outlining Westpac’s position in respect of their allegations.   It also advised them that the auction would be deferred until 25 May 2011 to allow them to arrange suitable financing and to propose an offer of settlement of their indebtedness.  At the same time, Westpac instructed its agents to recommence marketing Wicklam Lane with a view to a public auction on 25 May 2011.

[25]     Neither Westpac nor its solicitors received any further correspondence from the  Lambs and the auction proceeded on 25 May 2011.   A reserve was set by Westpac  of  $660,000.   There  were  bids  on  the  property,  but  bidding  stalled  at

$580,000.    The  auctioneers,  after  taking  instructions  from  Westpac’s  solicitors,

continued to seek bids, and the property was sold under the hammer at $600,000.

[26]     For Westpac to succeed in its application for summary judgment it must satisfy the Court that Mr and Mrs Lamb have no defence to its claim.1

[27]     The relevant principles have been summarised by the Court of Appeal in

Krukziener v Hanover Finance Ltd.2  The Court said as follows:

The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3. The court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11

PRNZ 66 (CA).   The court will not normally resolve material conflicts of evidence or assess the credibility of deponents.   But it need not accept

uncritically evidence that is inherently lacking in credibility, as, for example,

where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341. In the end the court’s assessment of the evidence is a matter of judgment. The court may take a robust and realistic approach where the facts warrant it: Bilbie  Dymock Corporation Ltd v Patel (1987) 1 PRNZ 84 (CA).

Submissions

[28]     Ms Lim, for Westpac, submitted that there was no arguable defence available to the Lambs.  She took me through the relevant materials, and submitted as follows:

(a)      Westpac  initially  gave  Mr  and  Mrs  Lamb  and  Lambfamsa  the opportunity  to  sell  the  Georgia  Terrace  units  and  the  unit  at Roanoke Way. They were unable to do so.

(b)      Westpac was entitled to and did exercise its right to sell as mortgagee.

She submitted that in doing so, each of the secured properties was properly marketed by experienced real estate agents, and that each was sold at a properly conducted auction.  She submitted that during

the course of the marketing campaigns, various issues affecting the

1      High Court Rules, r 12.2.

2      Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].

potential sale prices of the properties became apparent.  Nevertheless, she submitted that Westpac conducted a thorough marketing campaign and that it did its best to obtain the best prices reasonably obtainable at the time of sale.   She submitted that Westpac had discharged its duties under s 176 of the Property Law Act, and that it is entitled to judgment.

[29]     Mr and Mrs Lamb appeared in person.   I heard from both of them.   They accepted that Westpac is entitled to seek to recover from them the shortfall outstanding  after  the  proceeds  of  sale  of  the  mortgaged  properties  have  been deducted from the original loan balance.  They also accepted that there was likely to be a shortfall, but they challenged the amount of the shortfall claimed by Westpac. They argued that the reason for the amount of the shortfall is Westpac’s conduct in mismanaging the sales of the properties, and selling the properties at undervalues. They alleged that Westpac accepted false and untrue information regarding the properties from its agents — Barfoot and Thompson.  They said that Westpac did not sell the properties with a genuine desire to achieve the best price obtainable, that it failed to act upon specialised advice, and that the agents utilised by Westpac, a Mr Humphries  and  a  Mr Davis,  had  such  a  high  workload that  they could  not properly market the properties and obtain the best price reasonably obtainable for them.   Mr Lamb described the process adopted by Westpac as a ―cattle  auction‖. The Lambs disputed that there were any difficulties with the properties, and in particular, that they suffered from weathertightness issues.   They argued that they purchased the properties from reputable developers, that all had been built by experienced master builders, and that all had obtained code compliance certificates from the relevant local authority.  They suggested that weathertightness issues were

―just a ploy‖ in order to justify the low prices they assert were obtained.  Mr Lamb submitted   that   it   was   impossible  to   purchase  equivalent   properties   on   the North Shore at the prices obtained for the secured properties.  He criticised Westpac for failing to help him and his wife when they most needed assistance.  He stated that he and his wife had not received a ―fair deal‖,  and pointed out that they have lost everything, and that they are facing bankruptcy.

[30]     There  is  no  dispute  that  Westpac  made  the  advance  here  in  issue  to Lambfamsa.   There is no dispute about the cross-guarantee or the security documentation.  There is no argument about the various procedural steps taken by Westpac to trigger the power of sale available under the various mortgages held by it.   What is in issue is whether or not Westpac has complied with its obligations under s 176.

[31]     Section 176 provides as follows:

176      Duty of mortgagee exercising power of sale

(1)      A mortgagee  who  exercises  a power to sell mortgaged  property, including exercise of the power through the Registrar under section

187, or through a court under section 200, owes a duty of reasonable care to the following persons to obtain the best price reasonably obtainable as at the time of sale:

(a)       the current mortgagor: (b)       any former mortgagor: (c)       any covenantor:

…

A covenantor is defined in s 4 to include a person, other than the mortgagor, who has agreed to pay money or perform obligations secured by the mortgage.  It includes a guarantor.

[32]     Clearly, the duty detailed in s 176 is owed to Mr and Mrs Lamb.

[33]     The application of s 176 has been considered in a number of cases, and various  principles  have  been  developed  by  the  courts.    These  principles  were helpfully summarised in Public Trust v Ottow.3   Asher J there stated as follows:

When a mortgagee does exercise the power of sale, that power of sale must be exercised in accordance with s 176.  Although s 176 imposes a specific duty on the New Zealand mortgagee, there is a similar duty at common law

3      Public Trust v Ottow (2010) 10 NZCPR 879 (HC) at [17]. The ambit of the section is also discussed in Land Law (online looseleaf ed, Brookers) at [8.9].

on English mortgagees.  The English authorities on the duties of mortgagees offer useful guidance despite the different land transfer and conveyancing practices.  Given the wide ranging complaints of Mr Ottow concerning the sale, it must be observed that a mortgagee is ―not a trustee of the power of sale of the mortgagor‖: Nash v Eads (1880) 25 SJ 95, Jessel MR. It can be noted that:

a)A mortgagee has no duty at any time to exercise the powers of sale or possession.   In default of any provision to the contrary in the mortgage, the power of sale is for the benefit of the mortgagee, who can sell at any time in accordance with the mortgagee’s convenience: Raja (Administratrix of the Estate of Raja (Dcd)) v Austin Gray (A Firm) [2002] EWCA Civ 1965 at [55], per Peter Gibson LJ; Silven Properties v Royal Bank of Scotland [2004] 1 WLR 997 at [14].

b)The mortgagee’s duty of care is to take reasonable care to obtain the best price reasonably obtainable at the time of sale: Agio Trustees Co. Ltd v Harts Contributory Mortgages Nominee  Co.  Ltd  (2001)  4  New Zealand  ConvC  193,480 (HC).

c)It does not matter that the time may be unpropitious and that by waiting a higher price could be obtained: Tse Kwong Lam v  Wong  Chit  Sen  [1983] 1 WLR 1349 at 1355B; Silven Properties v Royal Bank of Scotland at [14].

d)A mortgagee is under no obligation to improve the property or increase its value: Silven Properties v Royal Bank of Scotland at [16].

e)A mortgagee sale for a price less than the current market value assessed by valuers does not, of itself, establish a breach of duty, although a large discrepancy may indicate a failure to take reasonable care: Moritzson Properties Ltd v McLachlan (2001) 9 NZCLC 262,448 at [61].

f)        A mortgagee does not have any general duty to maintain properties prior to sale: Silven Properties v Royal Bank of Scotland at [16].

g)        Following the service of a Property Law Act Notice there is no duty on a mortgagee to keep a guarantor informed of sales activities: G Merel & Co. Ltd v Barclays Bank (1963) 1

SJ 542.

h)The mortgagee is not entitled to sell in a hasty way at a knock-down price sufficient to pay the debt, which because of the speed of sale leads to a lower price than could otherwise  be  obtained:  see  Palk  v  Mortgage  Services Funding Plc [1993] 1 Ch 330 at 337-8.

i)         Proper care must be taken to expose the property to the market and to obtain the best price reasonably obtainable:

Harts Contributory Mortgages Nominee Co. Ltd v Bryers

HC AK CP403-IM00 19 December 2001 at [43](d) and (f).

[34]     I hesitate to supplement this careful analysis, but would suggest as follows:

(a)      The statutory obligation is not to obtain the best price reasonably obtainable, but to take reasonable care to obtain the best price reasonably obtainable;4

(b)A property is only worth what somebody is prepared to pay for it at the time of sale;

(c)      Valuations lose much of their significance if reasonable care is taken, there has been a properly advertised and conducted auction, and the property has been sold at auction or by negotiation after the auction;5

(d)If reasonable care is taken, it does not necessarily follow that the best price reasonably obtainable will, in fact, be achieved;6

(e)      What constitutes reasonable care will always turn on the facts of the case.  The steps taken by the mortgagee in fulfilling the statutory duty have to be looked at in the round.7

(f)      In considering the reasonableness of the care taken, the courts should be  slow  to  second-guess  the  actions  of  a  mortgagee  acting  on

apparently sound professional advice.8

4      Ibid, at [8.9.06(4)] and cases there cited.

5      Harts Contributory Mortgages Nominee Co Ltd v Bryers HC Auckland CP403-IM00, 19

December 2001 at [49]; ASB Bank Ltd v Urquhart HC Auckland CIV-2010-404-6913, 20 May

2011 at [85].

6      Agio Trustees Co Ltd v Harts Contributory Mortgages Nominee Co Ltd (2001) 4 NZ ConvC

193, 480.

7      Apple Fields Ltd v Damesh Holdings Ltd [2001] 2 NZLR 586 (CA) at [50]; affirmed on appeal, [2003] UKPC 54, [2004] 1 NZLR 721.

8      Taylor v Westpac Banking Corp (1996) 7 TCLR 177 (CA) at 182–183.

[35]     Asher J in Ottow provided useful guidance as to the factors which are likely to indicate whether a mortgagee has taken reasonable care to obtain the best reasonably obtainable price.  He stated as follows:9

The following steps indicate that a mortgagee has made reasonable efforts to obtain the best reasonably obtainable price:

a)The appointment of a reputable real estate agent to market the property.

b)Obtaining a valuation report from an experienced valuer as a guide to what could reasonably be expected for the property.

c)        Marketing over a reasonably long period of time.

d)       An extensive advertising and promotional campaign. e)     A properly conducted auction.

f)        A  sale  price  that,  given  all  the  circumstances,  can  be reconciled with expert opinion as to value.

[36]     I turn to consider the various steps taken by Westpac by reference to this discussion.

a)       Appointment of a Reputable Real Estate Agent to Market the Properties

[37]     Westpac appointed Barfoot and Thompson to undertake the marketing and sale of the secured properties. The listing agents involved were a Mr Humphries and a Mr Davis.   Affidavits have been filed confirming that both Mr Humphries and Mr Davis specialise in recovery work.  They assist banks and High Court registrars with the sale of properties at mortgagee sales.   They also assist insolvency practitioners during receiverships and liquidators following liquidations.  They have together been amongst the top 25 selling agents for Barfoot and Thompson in the majority of the last 12 years.  They were the top selling agents for the company in

2009 and 2010.  They have received awards recognising their achievements.  Both have been involved in the sale of a large number of residential properties throughout

Auckland City, including the North Shore.

9      Ottow, above n 3, at [31].

[38]     Mr and Mrs Lamb assert that the agents had too heavy a workload, and that they were unable to devote sufficient attention to the sale of the secured properties.

[39]     There is no evidence to support this assertion.  Moreover, what is primarily in issue  is  the  reasonableness  of  the  care  taken  by Westpac  through  Barfoot  and Thompson to sell the secured properties.  Detailed evidence has been given in this regard and the workload of the particular agents involved does not of itself compel the conclusion that other than reasonable care was taken.

b)       Obtaining a Valuation Report from an Experienced Valuer

[40]     Westpac obtained valuations from Barker and Morse Limited.   It did so at

Mr Lamb’s request, and at his recommendation.

[41]     The valuation reports disclose that Barker and Morse Limited were registered valuers and property consultants, based in Mairangi Bay on the North Shore.  They also  had  an  office  in  Orewa.     The  valuations  obtained  were  prepared  by  a Mr Coradine. The valuations disclosed that he had a diploma in urban valuation, that he  was  a  member  of  the  Property  Institute  of  New Zealand,  a  member  of  the Australia and New Zealand Institute of Registered Valuers, and an Associate of the Real Estate Institute of New Zealand.  The valuations record that Barker and Morse Limited were independent.   They state that the valuations were completed in accordance with the New Zealand Institute of Valuers’ and the Property Institute of New Zealand’s Codes of Ethics and property and valuation standards.  Mr Coradine confirms that at the date of the valuation he held an annual practising certificate from the Valuers’ Registration Board.

[42]     Westpac has endeavoured to contact Mr Coradine.  It has been unable to do so.

[43]     Barker  and  Morse  Limited  went  into  liquidation  in  April  2011.    The liquidator’s report does not contain any criticism of the firm, and attributes its failure to market factors.

[44]     There is nothing to suggest that Barker and Morse Limited were other than competent and experienced valuers.   Notably, Mr and Mrs Lamb did not suggest otherwise.

c)       Marketing Over a Reasonably Long Period of Time

[45]     The  Georgia  Terrace  units  and  the  unit  at  Roanoke  Way  were  actively marketed  over  a  four-week  period  from  12  January  2011.    The  auction  was conducted on 9 February 2011.

[46]     The  marketing  campaign  in  relation  to  Wicklam  Lane  commenced  on

14 March 2011.  The campaign lasted four weeks initially.  At the Lambs’ request, Westpac agreed to defer the auction for two weeks on 12 April 2011.  The marketing campaign however continued, with a view to selling the property at auction on

26 April 2011.  Following a letter of complaint from the Lambs dated 26 April 2011, the auction  was  halted  for a two  to  three-week  period.    So  was  the marketing campaign.  It was however recommenced on or about 12 May 2011, and it continued through until the public auction which was held on 25 May 2011.   In total, the property was actively marketed for eight weeks, and it was listed in Barfoot and Thompson’s books for 11 weeks.

[47]     The  length  of  the  marketing  campaigns  is  consistent  with  marketing campaigns conducted in similar cases.10    There was nothing exceptional about the properties which may have justified a longer marketing campaign.   No reasonable objection can be taken to the length of the respecting marketing periods for the properties.

d)       Extensive Advertising and Promotional Campaign

[48]    The Lambs consider that the marketing campaigns were inadequate.   In particular, they complain that ―for  sale‖  signs for the properties were insufficient,

and that the properties were not reasonably made available for viewing.

10     Public Trust v Ottow (four weeks); ASB Bank Ltd v Anderson HC Christchurch CIV-2009-404-

2522, 24 March 2010 (six weeks); Westpac New Zealand Ltd v Singh HC Auckland CIV-2011-
404-2434, 22 December 2011 (four weeks).

[49]     Again, it seems to me that this complaint is without foundation.

[50]     The Georgia Terrace units and the unit at Roanoke Way were advertised over a four-week period in the New Zealand Herald.  They were advertised over the same four-week  period  in  the  Property  Press  North  Shore,  and  in  Property  Weekly Chinese.  The properties were advertised on five different websites, all of which are relatively well-known.  Standard size signage was placed at the complex entrance for the unit at Roanoke Way, and also in front of the actual unit.   Signage was only displayed at the Georgia Units complex entrance, because of body corporate rules. Barfoot and Thompson distributed information sheets and brochures to those making enquiries.   Three open home viewings were held on the second, third and fourth weekends of marketing.  Barfoot and Thompson could not initially obtain the keys to unit 63 at Georgia Terrace, or the unit  at Roanoke Way,  and therefore kerbside viewings only were available for those properties at the first open home viewing. Barfoot and Thompson also sent out information to clients it had on its books who it considered might be interested, and it contacted those clients about the properties. The evidence discloses that enquiries were received from a number of potential purchasers.

[51]     The Wicklam Lane property was advertised seven times in the New Zealand Herald, five times in the New Zealand Herald Property supplement, and once in the New Zealand  Herald  Country  Coastal  publication.     It  was  advertised  over  a four-week  period  in  the  Property  Press  North  Shore,  and  in  Property  Weekly Chinese.    It  was  advertised  for  an  11-week  period  on  five  different  websites. Signage was placed outside the property.   Information sheets and brochures were distributed to those making enquiries.  Six open homes/viewings were held on six different weekends, and contact was made, and flyers sent, by the agents to relevant Barfoot and Thompson clients.

[52]     In my view, it is patently clear that there were extensive advertising and promotional campaigns.   Indeed, it is difficult to see that Westpac and its agents could have done much more.

e)       A Properly Conducted Auction

[53]     No issue has been raised by the Lambs in respect of the conduct of the auctions.  As I have noted, the Georgia Terrace units attracted no bids.  The unit at Roanoke Way did attract a bid, but all of these properties were passed in at auction, and Westpac ended up accepting the highest offers following post-auction negotiations.   At the auction of the Wicklam Lane property, the reserve was not reached.  After receiving instructions from Westpac’s solicitors, the auctioneers continued with the auction and proceeded to use their best endeavours to attract further bids. The property was sold to the highest bidder.

f)        Sale Price can be Reconciled with Expert Opinion

[54]     I deal with each of the properties in turn.

i)         Unit 51 Georgia Terrace

[55]     This property sold following the auction for $350,000.

[56]     Barker and Morse Limited valued the property in August 2010 at $470,000, including its fixed chattels.  The valuation expressly recorded that it was subject to any latent or patent defects which could result in the structure or materials ceasing to be weathertight, and/or containing any rot or gradual decay.  It noted that Barker and Morse Limited were not qualified structural engineers, and that their report should not be considered a structural or weathertightness survey.   It advised that the firm had not inspected unexposed or inaccessible portions, and that the valuation was prepared on the basis that there were no problems with materials and/or construction methods which could have an adverse affect on the value of the property.

[57]     In November 2010, Baker and Morse Limited undertook a further forced sale valuation at Westpac’s request.  The forced sale assessment valued the property in the range $375,000 to $400,000.

[58]     When Barfoot and Thompson were appointed by Westpac to undertake the sale on its behalf, their initial estimate was that the property was valued at $410,000. That estimate was made on 5 November 2010.

[59]     Barfoot and Thompson reported to Westpac on the progress of its marketing campaign.   It noted that prospective purchasers had raised a number of concerns, including weathertightness issues.   Such issues had already been raised by the manager of the complex in which the units were situated.   There were also outstanding body corporate levies that a prospective purchase would be liable to pay. Accordingly,  Barfoot  and  Thompson  reduced  their  anticipated  sale   price  to

$350,000. That updated estimate was given in February 2011.

[60]     The reserve set by Westpac at the auction was $356,200.  As noted, no bids were received.

[61]     There is no significant discrepancy between the valuations and the sale price. Such limited discrepancy as exists is readily explained given the concerns which purchasers reported to Barfoot and Thompson, and which were in turn, relayed back to Westpac.   As noted at [34]  above, ultimately a property is only worth what somebody is prepared to pay for it, and valuations lose much of their force when the mortgagee  has  taken  reasonable  care  and  there  has  been  a  properly  conducted auction.

ii)        Unit 63 Georgia Terrace

[62] The initial valuation from Barker and Morse Limited was $425,000. It contained a qualification in relation to the weathertightness of the unit. The forced sale valuation was in the range of $340,000 to $360,000. Barfoot and Thompson’s initial estimate was $320,000. Again, it is apparent from the affidavits filed that prospective purchasers told Barfoot and Thompson that they were concerned about weathertightness issues, and outstanding body corporate levies. Further, it seems from the correspondence sent by the Lambs to Westpac noted at [16] above, that the Lambs were also aware of those issues. Barfoot and Thompson’s amended estimate given in February 2011 was $270,000. Westpac set a reserve of $323,500 on the

property, and it sold for $300,000. I repeat my observations made at [34] above. Again, there is no significant discrepancy, and the sale price achieved can be readily reconciled with the valuations, given the concerns expressed by prospective purchasers.

iii)       General — Georgia Terrace Units

[63]    I also note that Mr Davis, one of the agents at Barfoot and Thompson responsible for the sales, has filed an affidavit disclosing that 10 other units in the Georgia Terrace complex were also on the market at the same time, and that none of those units have sold.

iv)       Roanoke Way Unit

[64]     The initial valuation provided by Barker and Morse Limited was $440,000. It contained a qualification in relation to the weathertightness of the unit.  The forced sale valuation was $350,000 to $375,000.  Barfoot and Thompson’s initial estimate was  $375,000.    It  is  clear  from  the affidavits  that  concerns were expressed by prospective purchasers about weathertightness issues.  It was also suggested that the property did not have a code compliance certificate.   It transpires that prospective purchasers  were  wrong  in  this  regard,  and  that  there  was  a  code  compliance certificate for the property.  Nevertheless, there is nothing to suggest that Barfoot and Thompson told prospective purchasers that there was no code compliance certificate. It was not advertised on this basis.   Barfoot and Thompson’s amended estimate, given  the  concerns of  prospective purchasers was  $350,000.   Westpac placed  a reserve on the property of $355,000.  The highest bid achieved at the auction was

$210,000.  It was sold following post-auction negotiations at $300,000.

[65]     Again, I repeat my comments noted in [34] above.   Again, the sale price achieved can be readily reconciled with the various valuations and estimates.

v)        General — Georgia Terrace and Roanoke Way Units

[66]     It is also noteworthy that Mr and Mrs Lamb and Lambfamsa had tried to sell both the Georgia Terrace and the Roanoke Way units without success prior to the mortgagee sales, and prior to the marketing campaigns commencing in January 2011.

vi)       Wicklam Lane

[67]     Barker and Morse Limited initially assessed the value of this property at

$780,000, subject to the weathertightness qualification already noted. The forced sale valuation was $620,000 to $660,000. Barfoot and Thompson’s initial estimate was $610,000. Prospective purchasers expressed concern regarding the internal layout of the property. Numerous visitors to the property considered that the interior was basic, the hallway narrow, the kitchen poorly designed, and the living areas too dark. A number of visitors commented on the lack of level or useable garden suitable for young children. Based on the feedback acquired, Barfoot and Thompson’s amended estimate was $570,000 as at 12 April 2011. Westpac placed a reserve on the property of $660,000. The property was sold at auction at the highest bid received — $600,000. Again, it seems to me that there is no significant discrepancy, and that such differences as exist can be reconciled given the concerns expressed by prospective purchasers. I repeat my comments at [34] above.

vi)       Mr Taylor’s Views

[68]     Mr and Mrs Lamb produced in evidence a letter written by a Mr Darren Taylor, who is a real estate agent with Ray White, Orewa.  In that letter, Mr Taylor observed as follows:

The properties sold at mortgage could have achieved better prices, and seem to have been sold below what the normal market price expectations may have been at the time.

[69]     That letter is documentary hearsay but Westpac did not take issue with it being admitted.  With respect to Mr Taylor, and to Mr and Mrs Lamb, the assertion is highly equivocal.   What could have been achieved, what the properties may have been  sold  for,  and  what  were  normal  price  expectations  are  speculative,  and irrelevant in the context of a mortgagee sale, where the mortgagee has taken reasonable care to obtain the best price reasonably obtainable at the time of sale.

Mr Taylor’s observation focuses on the prices obtained, not the reasonableness of the

care taken.

Result

[70]     While I have some sympathy for the Lambs, I have no hesitation in finding that they have no arguable defence available to them.  There is nothing to suggest that Westpac has breached the duty of care owed by it under s 176.

[71]     Accordingly, I give summary judgment to Westpac as follows: (a)     Judgment in the sum of $346,324.36;

(b)Interest on the sum of $345,060.61 at the rate of 11.24 per cent (being Westpac’s  floating rate)  per annum,  compounding monthly on  the tenth day of every month and payable from 24 June 2011 until the date of payment by the Lambs;

(c)     The costs of and incidental to this proceeding on a reasonable solicitor–client basis.

In this regard, Westpac is to file and serve a memorandum within five working days setting out the costs claimed by it, and the basis on which those costs have been calculated.   Any memorandum in reply from the Lambs is to be filed and served within a further  five  working-day period.    I will then  determine on  the papers whether or not the costs claimed are reasonable solicitor–client costs, unless I require

the assistance of the Lambs and counsel.

Wylie J