Barry John Hart v ANZ National Bank Ltd

• Jurisdiction: New Zealand
• Judge: Abbott
• Judgment Date: 29 October 2012
• Neutral Citation: [2012] NZHC 2839
• Docket Number: CIV 2012-404-002583
• Court: High Court
• Date: 29 October 2012

Between

Barry John Hart

First Plaintiff/First Counterclaim Defendant

and

Woodhill Stud Limited

Second Plaintiff/Second Counterclaim Defendant

and

Woodhill Holdings Limited

Third Plaintiff/Third Counterclaim Defendant

and

Malory Corporation Limited

Fourth Plaintiff/Fourth Counterclaim Defendant

and

ANZ National Bank Limited

Defendant/Counterclaim Plaintiff

[2012] NZHC 2839

CIV 2012-404-002583

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

Application for summary judgment — bank had made loans in excess of $30 million which were guaranteed by various plaintiffs and secured by “all obligations” mortgages over properties owned by the plaintiffs or family members — loans fell into arrears — bank sold seven of eight security properties in mortgagee sales — efforts of plaintiffs to prevent sales were unsuccessful and their claim was amended to one for damages — bank applied for summary judgment of the plaintiffs' claims, and its counter-claim for the loan debt — plaintiffs said first set of Property Law Act (“PLA”) notices were invalid as they included claims for interest that was not quantified or due — argued second set of notices did not validate sales already effected and bank had to recommence mortgagee sale process — whether bank breached duty of care to the plaintiffs under s176 PLA (duty of mortgagee exercising power of sale).

Appearances:

Counsel:

B J Hart, first plaintiff/first counterclaim defendant in person M J Porner for second, third and fourth plaintiffs/counterclaim defendants

L A O'Gorman/ A L Williams for defendant/counterclaim plaintiff

M J Porner Barrister, PO Box 47016, Ponsonby, Auckland 1044

Also to:

B J Hart, 1331 State Highway 16, Waimauku, Auckland, New Zealand

JUDGMENT OF ASSOCIATE JUDGE Abbott

1 This proceeding arises out of loans made by the defendant bank (ANZ National Bank Limited (ANZ)) to the first plaintiff, Mr B J Hart, and the fourth plaintiff, Malory Corporation Limited (Malory). The loans to Malory were guaranteed by Mr Hart and by the second and third plaintiffs. All loans were secured by “all obligations” mortgages over properties owned by the plaintiffs or Mr Hart's family members.

2 The total of the loans was substantial (collectively in excess of $30 million), as were the land holdings provided by Mr Hart and the related parties (10 titles together comprising a little over 970 hectares of rural land).

3 The loans fell into arrears. After undertaking a lengthy review of the loans and the securities, ANZ made demand for arrears on fixed term loans that had not become due, and for repayment of loans that were either due for payment or were repayable on demand. The parties entered into a “stand still” arrangement to allow the plaintiffs a six month period in which to attempt to sell the security properties. Sales had not been effected by the end of that period and ANZ commenced steps to sell as mortgagee. This led to the issue of the present proceeding.

4 This proceeding commenced with an application by the plaintiffs for an interim injunction to prevent the mortgagee sales. The plaintiffs withdrew both the initial application, and a second one brought on expanded grounds, at the hearing of those applications and before they were substantively determined. ANZ has since entered into agreements for the sale of seven of the eight security properties and, after obtaining court orders for the removal of caveats over the titles, has settled the sale of those properties. The plaintiffs have recently amended their claim to one for damages.

5 Following the dismissal of the first application for an interim injunction, ANZ filed a statement of defence and counterclaimed for the debt due to it under the loan agreements. At the same time it applied for summary judgment (or strike out) of the plaintiffs' claims, and for summary judgment on its counter-claims for the loan debt and for vacant possession of one of the security properties (the property where Mr Hart resides). This is the application now before the Court.

6 The plaintiffs oppose all applications. They say they have an arguable defence that ANZ breached its statutory duty of care 1 in relation to the mortgagee sale process (resulting in the sale prices achieved by ANZ's tender process falling substantially short of the current market value of the properties), and breached another statutory duty 2 by failing to allow Mr Hart to redeem the mortgage over the property where he lives. The plaintiffs say that they have an arguable claim for damages 3 which cannot be determined by summary judgment, and that this also gives them an arguable defence to ANZ's counter-claim.

7 Mr Hart initially opposed the application for vacant possession 4 also on the grounds that the claim was statute barred 5 and on the grounds that that property was subject to an equitable lease and residential tenancy, but did not pursue those grounds in the hearing.

8 When the plaintiffs' initial application for injunction was dismissed, the Court made an order for costs against them. ANZ issued a bankruptcy notice against Mr Hart requiring payment of those costs. Mr Hart has applied to set aside that notice contending that his claim against ANZ affords him an equitable set off. It is common ground that that application will fail if the Court finds that Mr Hart does not have an arguable defence to the summary judgment application.

Legal principles for summary judgment

9 ANZ's applications are brought under r 12.2 of the High Court Rules, which permits the Court to give judgment:

• (a) For a defendant against a plaintiff, if the Court is satisfied that none of the causes of action in the statement of claim can succeed; 6 and

• (b) For a plaintiff 7 against a defendant 8 if the Court is satisfied that the defendant has no defence to a cause of action in the statement of claim. 9

10 As will be apparent from the summary of r 12.2 just given, there is a difference in procedure between a plaintiff's application and a defendant's application: in the latter the defendant must satisfy the Court that the plaintiff cannot succeed on any of its causes of action. 10

11 The principles that the Court applies in such applications are well established, and were succinctly summarised by the Court of Appeal in Krukziener v Hanover Finance Ltd: 11

[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 (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 Limited v Patel (1987) 1 PRNZ 84 (CA).

12 Two further matters arising out of these general principles are of particular significance for the present case:

• (a) Summary judgment must be declined where there are genuine disputes of facts going to the essence of the plaintiff's claim; but hypothetical defences in vague terms are insufficient to constitute an arguable defence; 12 and

• (b) Although the onus remains on the party applying to show that there is no arguable defence, the party defending must provide some evidential foundation for any defence that he or she raises. 13

Preliminary matters

13 The plaintiffs failed to comply with directions given on 19 July 2012 for the filing of any notice of opposition and supporting affidavits by 31 August 2012, and for the filing of submissions by 8 October 2012. Instead, they filed a notice of opposition on 2 October 2012, an amended notice of opposition on 8 October 2012, and an affidavit by Mr Hart on 15 October 2012. No written submissions were filed. Mr Hart and counsel for the corporate plaintiffs were allowed to make oral submissions.

14 In addition, although the notices of opposition referred to an opposition on behalf of all plaintiffs, they were filed by Mr Hart (who does not hold a practising certificate as a solicitor) and there is no solicitor on the record for the corporate plaintiffs.

15 Counsel for ANZ did not take issue with the late filing of the notices of opposition, nor oppose reading of the affidavit of Mr Hart (despite its lateness) as ANZ did not want the hearing to be adjourned. However, counsel noted that there had been no opportunity for ANZ to respond to the late affidavit, and submitted that this should be reflected in the weight to be given to any matters raised in it. As ANZ's submissions had been filed before the notices of opposition, counsel was given leave to file a further submission in reply to new matters raised in the notices of opposition.

16 Counsel for ANZ also noted that there was an irregularity in the amended statement of claim filed by the plaintiffs on 19 September 2012 in that it purported to be filed by a solicitor who had been granted an order to be removed as solicitor on the record on 6 September 2012. Counsel for ANZ accepted that the amendments were not significant (they recorded the fact that properties had been...