Hart v Anz Bank New Zealand Ltd

• Jurisdiction: New Zealand
• Judge: William Young J
• Judgment Date: 01 May 2013
• Neutral Citation: [2013] NZSC 44
• Docket Number: SC 35/2013
• Court: Supreme Court
• Date: 01 May 2013

BETWEEN

Barry John Hart

Applicant

and

ANZ Bank New Zealand Ltd

Respondent

[2013] NZSC 44

SC 35/2013

IN THE SUPREME COURT OF NEW ZEALAND

Application for leave to appeal against Court of Appeal's (“CA”) dismissal of an adjournment application and application for stay of the CA judgment — High Court (“HC”) allowed bank's claim against applicant's associated companies in respect of mortgage defaults and ordered the applicant to vacate his home — applicant was adjudicated bankrupt and his companies placed into liquidation — Official Assignee (“OA”) abandoned appeal — applicant appealed to HC against OA's decision to abandon appeal — CA dismissed application for adjournment of hearing of appeal by applicant on ground that as OA had abandoned the appeal, it had to be treated as terminated — applicant disputed OA's right to abandon appeal and claimed that he was litigating as a trustee of a trust that held ownership of the home — whether the abandonment of appeal by the OA was effective — whether the application for stay had to be granted.

counsil

J N Bioletti for applicant

L A O'Gorman and A L Williams for respondents

G S Caro for Official Assignee

• A The application for a stay and consequential orders is dismissed.

• B Costs are reserved.

JUDGMENT OF William Young J

REASONS

Background

1 ANZ Bank New Zealand Ltd, the respondent, lent Barry Hart, the applicant, and a company associated with him, Malory Corporation Ltd, a large sum of money. Mr Hart and two other companies associated with him, Woodhill Stud Ltd and Woodhill Holdings Ltd, guaranteed Malory's loan. The loans fell into arrears. The bank took steps to realise its securities over eight properties but it became clear quite quickly there was going to be a shortfall.

2 There has been much legal skirmishing between Mr Hart and the three associated companies 1 and the bank. In the course of that litigation, Mr Hart gave an undertaking that he would not pursue further injunctive relief against the bank to prevent the bank's mortgagee sales.

The High Court proceedings

3 The only proceeding currently relevant is CIV-2012-404-2583, a High Court proceeding in which Mr Hart and the companies brought a claim against the bank and the bank counterclaimed against them. Mr Hart's claim was effectively a pre-emptive strike, intended to set up a defence to the bank's claim for the debt he owed. The bank sued Mr Hart and the companies for over $20 million. Mr Hart by his claim defended that by seeking damages for two wrongs said to have been committed by the bank:

• (a) it had breached its statutory duty of care in relation to the mortgagee sale process resulting in the sale prices achieved by the bank's tender process falling substantially short of the current market value of the properties; and

• (b) it had breached another statutory duty by failing to allow Mr Hart to redeem the mortgage over the Home Block. 2

4 The bank also sued Mr Hart for an order that he vacate the Home Block. The bank, exercising its powers as mortgagee, had put that property up for sale and invited tenders. It wished to be in a position to accept a tender and settle with vacant possession, and in fact, had received offers conditional on obtaining vacant possession. Mr Hart opposed the order to vacate on the basis the bank had stipulated it was not prepared to accept tenders expressed as an amount exceeding any other tender and was thus not prepared to accept an offer from him to pay $25,000 more than the highest tenderer.

5 The bank applied for summary judgment on its claim and, as a defendant, for summary judgment on Mr Hart's claim. Associate Judge Abbott delivered his judgment on 29 October last year. 3 The bank succeeded on both of its applications for summary judgment. The Judge held that Mr Hart and the companies had not demonstrated an arguable case with respect to either head of claim put forward by way of set-off. In particular, the steps taken by ANZ to obtain the best prices were sufficient to meet its statutory duty of reasonable care. In respect of the second claim, Mr Hart was entitled to redeem only by paying the full amount owing. The Judge held the bank was not obliged to accept Mr Hart's “tender”, whether construed as attempted (part) redemption or as a tender in the mortgagee sale process. The Judge also ordered Mr Hart to vacate the Home Block.

The appeal to the Court of Appeal

6 Mr Hart and the companies appealed. On 17 December, Mr Hart was adjudicated bankrupt. 4 All three associated companies were placed in liquidation on 11 March this year, with the Official Assignee appointing himself liquidator of the three companies. The Official Assignee abandoned the appeal by Mr Hart and the companies. His asserted power derives from s 101 of the Insolvency Act 2006 (in so far as Mr Hart is concerned) and s 248 of the Companies Act 1993 (in so far as the companies are concerned).

7 The appeal came on for hearing on 20 March this year. Mr Bioletti, purporting to act for all the appellants, sought an adjournment. He submitted that Mr Hart disputed the Official Assignee's right to abandon the appeal. The basis of the challenge in relation to Mr Hart's involvement in the appeal was a claim that Mr Hart had been litigating as a trustee of a trust and not in his personal capacity. Broadly similar issues arose in relation to ownership of the shares in the companies and thus the right of the Official Assignee to treat them as passing on adjudication. In his dealings with the Official Assignee, Mr Hart had not supplied documentary or other evidence to support his contentions as to trust involvement and there was nothing in the material before Associate Judge Abbott to suggest that Mr Hart was

suing as a trustee. Even in the Court of Appeal, when Mr Hart was challenging the entitlement of the Official Assignee to abandon the appeal, no evidence was adduced to substantiate the trust argument. Mr Hart had, however, appealed to the High Court against the Official Assignee's decision to abandon the appeal

8 The Court of Appeal, while perhaps sceptical of the trust claims, did not seek to resolve them one way or the other. It noted that the trust issues would be determined in the High Court appeal and held that, since the Official Assignee had abandoned the appeal, the appeal had to be treated as terminated. Accordingly, the application to adjourn the hearing of the appeal was dismissed. The Court made consequential orders, 5 which included confirmation that the bank was released from an undertaking it had given not to take any further steps to exercise its power of sale over the home block.

The application for leave to appeal to this Court

9 Mr Hart and the companies have sought leave to appeal from the Court of...