Wine Country Credit Union v Dugh HC Napier CIV-2010-441-667

[2010] NZHC 2380

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2010-441-667

BETWEEN  WINE COUNTRY CREDIT UNION Plaintiff

ANDSATNUM SINGH DUGH First Defendant

ANDCSUN LIMITED Second Defendant

Hearing:         9 December 2010

Appearances: E.M. Bate and A. McCurrach - Counsel for the Plaintiff

J.W.A. Rainger - Counsel for the Defendant

Judgment:      9 December 2010 at 4.30 pm

ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This decision is delivered by Associate Judge Gendall on 9 December 2010 at 4.30 pm under r 11.5 of the High Court Rules.

Solicitors:           Hansen & Bate Ltd, Solicitors, PO Box 235, Hastings 4156

Alan Cressey, Wellesley Chambers, PO Box 7122, Taradale

WINE COUNTRY CREDIT UNION V SS DUGH AND ANOR HC NAP CIV-2010-441-667  9 December 2010

Introduction

[1]      Before the Court is an application by the plaintiff for summary judgment against both the first defendant and the second defendant.

[2]      This application is opposed by the defendants and a Notice of Opposition and supporting affidavit of Satnam Singh Dugh, the first defendant were filed on 16

November 2010.

Background Facts

[3]      The plaintiff is a credit union which lent funds secured by mortgages to the first defendant during 2007 and 2008.  These loans were guaranteed by the second defendant.

[4]      The  statement  of  claim  sets  out  four  causes  of  action  against  the  first defendant.    These  causes  of  action  correspond  to  each  of  the  four  successive mortgage contracts entered into between the parties.

[5]      The statement of claim also sets out one cause of action against the second defendant.   This relates to an all obligations guarantee entered into by the second defendant  by  which  it  guaranteed  the  obligations  of  the  first  defendant  to  the plaintiff.

[6]      Mortgage  securities  were  provided  in  respect  of  each  of  the  mortgage contracts.  These are particularised in the plaintiff’s statement of claim.

[7]      It appears now that all but two of the mortgage securities held have been realised by the plaintiff.  The amount recovered of $227,026.94 has apparently been applied globally against the debts owing under each of the four mortgage contracts.

Counsel’s Arguments and My Decision

[8]      Before me, the plaintiff acknowledged that since the statement of claim was filed the plaintiff has made a concession in respect of the applicable finance rate to

provide the first and second defendants with a reduction of 1% to the interest rate. This is noted.

[9]      Recently, the solicitor to the defendants has apparently been provided with a spreadsheet setting out the new calculation of the debts outstanding, taking into account this 1% interest rate reduction.   The spreadsheet was apparently provided around 25 November 2010 and no objection had been received to the calculations provided by counsel for the plaintiff prior to the hearing of this matter.

[10]     Before me today, counsel for the plaintiff also noted that the amount claimed by way of summary judgment in the statement of claim being $980,501.47 is to be reduced by the 1% interest rate concession amounting to $18,420.62, together with a further reduction of $4,785.00 representing rental payments received by the plaintiff from the property/ies as mortgagee in possession.  This leaves a total core summary judgment claim by the plaintiff against the defendants totalling $957,295.85.   In addition, an award of indemnity costs and disbursements are sought.

[11]     Turning now to the defendants’ opposition to the present application, their

Notice of Opposition filed on 16 November 2010 states specifically:

(2)        .....

The  defendants accept  that  they  are  liable  to  the  plaintiff  for  a  sum, believed to be around $700,000.00 in respect of the loans advanced by the plaintiff  and  would  accept  entry  of  judgment  for  liability but  not  for quantum, which is in dispute.

[12]     That Notice of Opposition although being rather non-specific does appear to identify one issue which is in dispute between the parties.   This is the applicable interest rate under the loans.

[13]     The only issue therefore in dispute concerns what is said by the defendants to be an overstatement of quantum (given that liability is accepted by the defendants). On this, at para [23] of the 16 November 2010 affidavit of the defendant Mr Dugh, filed in this proceeding, he states in part:

It was also agreed that there would be no more penalty interest charges, as the mode by which I repaid the loans was not the usual manner of servicing a mortgage with monthly payments.   All loans were to accrue interest at 8% p.a. from that time forward.

[14]     That issue is responded to by the plaintiffs in the joint reply affidavit sworn

17 November 2010 by Mr Ferry and Mr Sharp which essentially indicates that this claim by the first defendant is a simple fabrication.  No such agreement was reached they contend.

[15]     On this aspect the applicant’s submissions which, in my view, have substance were:

(a)There is no corroboration for the first defendant’s assertion noted at para [13] above.

(b)The assertion is inconsistent with the letter from the plaintiff to the first defendant dated 15 July 2009 exhibited as Exhibit “A” to the first defendant’s own affidavit sworn 16 November 2010, which offers only a 1% reduction of interest.

(c)      It is simply unrealistic to suggest that a commercial loan for property development which was in default at the time and for which Default Notices  and  Property  Law  Act  Notices  had  already  been  issued would, by agreement, be reduced to a lower interest rate equivalent to a first mortgage housing rate of interest.

(d)The first defendant’s assertions appear to be a fabrication to create a defence and reduce his liability and the liability of the second defendant.

[16]     As I have noted, the application before me is one for summary judgment whereby in terms of r 12.2 of the High Court Rules the plaintiff is required to show that the defendant has really no defence to the claim made and therefore judgment is required to put an end to the spectacle of a worthless defence being raised and pursued simply for delaying purposes – Pemberton v Chappell 1987 1 NZLR1.

Recently, the Court of Appeal in Krukziener v Hanover Finance Ltd [2008] NZCA 187; [2010] NZAR 307 has set out the accepted summary judgment principles in some detail as follows:

[26]The  principles are  well  settled. 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; (1986) 1 PRNZ 183 (CA), at p 3; p 185. 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; [1979] 3 WLR

373 (PC), at p 341; p 381. 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 Corp Ltd v Patel (1987) 1 PRNZ

84 (CA).

[17]     The Court of Appeal has also said that a robust approach is to be taken to summary judgment  applications  where  the  need  arises  and  particularly  in  cases where affidavits lack any aura of credibility – Bilbie Dymock Corporation Limited v Patel (1987) 1 PRNZ 84 (CA).

[18]     In  the  present  case,  even  in  their  Notice  of  Opposition  to  the  present application, the defendants concede liability to the plaintiff here.   Their point of opposition, as I have noted above, relates simply to quantum, where they contend that the true debt amount owing is “around $700,000.00” and not the figure of

$957,295.85 now claimed by the plaintiff.

[19]     Before me, Mr Rainger appearing for the defendants, acknowledged that there is no documentary evidence before the Court providing any corroboration of the first defendant’s assertions at para 23 of his affidavit which I have noted at para [13] above.  And, to his credit, Mr Rainger indicated to me that he is really unable to take that point any further.

[20]     Mr Rainger did, however, endeavour to raise an issue concerning GST here, but in my view it has no relevance here.

[21]     Effectively any defence which the defendants purported to advance in their Notice of Opposition and in the first defendant’s 16 November 2010 affidavit has fallen away.

[22]     In addition, I need to say that in my view there is absolutely nothing before the Court to indicate that the claim made by the plaintiff in its statement of claim, as amended by Mr Bate before me today, is properly challengeable.

Conclusion

[23]     For all these reasons, summary judgment is therefore granted to the plaintiff against  the  first  defendant  and  against  the  second  defendant  in  the  sum  of

$957,295.85 as claimed in the plaintiff’s statement of claim and amended as noted at para [10] above.

[24]     I now turn to the issue of costs.  On this, the first defendant, Mr Dugh has apparently applied for a grant of legal aid for this proceeding but this has yet to be approved.

[25]   By consent, costs are reserved with respect to the summary judgment application against the first defendant.

[26]     When  the  position  concerning  legal  aid  is  known  counsel  may  file memoranda on the costs question sequentially and I will decide the issue of costs sought against the first defendant on the basis of the material before the Court.

[27]     In so far as costs against the second defendant are concerned, in my view there is no reason why costs should not follow the event here in the normal way. Costs totalling $12,951.11 and disbursements totalling $1,124.44 are sought against the second defendant.   These represent actual solicitor client costs incurred by the plaintiff as outlined in tax invoices provided to the Court and dated 29 October 2010 and 30 November 2010.

[28]     In terms of the loan documentation between the parties before the Court, it is clear that the plaintiff is entitled to actual costs incurred in enforcing recovery of the amounts due under the Loan Agreements.

[29]     That said, the plaintiff is entitled to an award of actual costs here, and costs are therefore awarded to the plaintiff against the second defendant in the sum of

$12,951.11 together with disbursements totalling $1,124.44 making a total judgment for costs and disbursements of $14,075.55.

‘Associate Judge D.I. Gendall’