Parnell Property Investments Ltd v Bank of New Zealand Hc Ak

JurisdictionNew Zealand
CourtHigh Court
Judgment Date25 January 2012
Neutral Citation[2012] NZHC 12
Docket NumberCIV-2010-404-7186
Date25 January 2012

[2012] NZHC 12




Parnell Property Investments Limited
First Plaintiff


St Stephens Investments Limited (in Liquidation) (discontinued)
Second Plaintiff


Stephen Osborne
Third Plaintiff
Bank of New Zealand
Bank of New Zealand
Parnell Property Investments Limited (In Liquidation)
First Defendant


St Stephens Investments Limited (In Liquidation)
Second Defendant


Fifer Residential Limited
Third Defendant


Stephen Osborne and Julie Margaret Alexander
Fourth Defendants


Julie Margaret Alexander
Fifth Defendant

A M Swan for Fifer Residential Ltd, Stephen Osborn and Julie Margaret Alexander

Z Kennedy and N Chamberlain for Bank of New Zealand

Summary judgment application by the third plaintiff claiming defendant induced a breach of contract and caused interference with trade by unlawful means — Summary judgment application by defendant seeking enforcement of guarantees and strike out of plaintiffs' claims — loans given to companies on condition that facility be used to reduce overdrafts of to other companies — defendant transferred money to clear overdrafts and plaintiffs had insufficient funds to settle on development purchase by one of their associated companies — whether transfers of funds by bank to reduce indebtedness of other companies were unauthorised — whether transfers affected plaintiffs' guarantees — whether defendant had induced breach of contract or caused loss by wrongful interference by making transfers — whether director of plaintiffs could claim when not himself a party to the sale and purchase contract.

The issues were: whether the transfers made by BNZ from Parnell's and St Stephens accounts to related companies to reduce their indebtedness were unauthorised; if so, how did it affect the guarantees given; whether BNZ had induced a breach of contract and/or unlawfully interfered in trade; and whether O could claim on behalf of the affected companies.

Held: It was clear that BNZ treated Parnell and St Stephens as being more connected with the A's in a business sense than with O. The letter of offer also provided for funds to be advanced to other entities connected with the A's. Both Mrs A and O signed the letter of offer and must have seen from the letter that BNZ treated the companies as connected in a business sense, if not in a legal sense. Once the connection was accepted, Mr A's denial of any arrangement for Fifer and Proprius to be paid was lame. It was implausible that BNZ would advance funds for refinancing on the property in which Mr and Mrs A were living without addressing the outstanding debts of Fifer and Proprius.

There was a factual dispute as to the authorisation. The signing of the letter of offer and the letter of advice for the facility was the authority for BNZ to use the funds to pay the debts. Mrs A was running the defence as to the Fifer and Proprius payments simply as a stalling device to prevent BNZ from suing her under the guarantees.

When a bank made a deduction from a customer's account without authority, the customer was entitled to require the bank to correct the account by crediting the account with the amount of the deduction and to make consequential adjustments for interest and bank charges. In this case, there was a usual creditor-debtor relationship between the bank and its customer and there was nothing that imposed a fiduciary duty on BNZ. However, Mrs A and O have given the guarantees knowing the contested payments had been made. In giving the guarantee they had not lost the right to say BNZ had made incorrect deductions, but they did not have grounds to avoid the guarantees.

O did not have a tenable cause of action in his claims against the bank for inducing a breach of contract in respect of the default under the sale and purchase agreement. O was not the purchaser under the sale agreement; Proprius nominated Sarah's Cove Ltd as the purchaser. Even though Sarah's Cove Ltd was entitled to enforce the agreement for sale and purchase, that did not make O a party to the agreement. Being a director and shareholder did not give him standing to sue for alleged losses to the company. There was no evidence that Proprius bought as O's agent or nominated him.

The party that breached the agreement was Proprius. If there had been conduct that induced the breach, the persons entitled to sue were the vendors. Only the victim of the breach could sue, not the party in breach, even if induced.

The tort of intentionally causing loss by unlawful means was an independent tort ( Van Camp Chocolates Ltd v Aulsebrooks; OBG Ltd v Allan). There had to be a wrongful interference with the actions of a third party in which the plaintiff had an interest, and an intention thereby to cause loss to the plaintiff. The party alleged to be the target of the bank's conduct was Sarah's Cove Ltd. However it did not have any cause of action against the bank for the transfers. The transfers were not an independent wrong against Sarah's Cove Ltd. The entities that could make a claim about the transfers were Parnell and St Stephens. BNZ could not have intended to divert funds from Sarah's Cove Ltd to prevent the purchase, because Sarah's Cove Ltd was not incorporated at that time. There could not have been an intention to divert funds from Proprius because the transfer was to Proprius. The effect of the payment was to reduce its liabilities, which would have assisted it in raising funds for the purchase of the Coromandel property.

O could not set himself up as a plaintiff in a claim of interference by unlawful means. The claim was the company's, not his as a director. Further, at the time of the transfers he had not had any economic interest in the parties to the agreement for sale and purchase.

Summary judgment in favour of BNZ against Mrs A and O as trustees of the Alexander Family Trust and against Mrs A personally. Summary judgment granted for BNZ against O's claim.



These two cases have been heard together as they relate to similar facts. In CIV-2011-404-3643 the Bank of New Zealand is the plaintiff and seeks judgment against five defendants. The proceeding CIV-2010-404-7186 relates to similar facts but in this the bank is the defendant whilst one of the named defendants in the first proceeding is the plaintiff. Taken together there are three matters for decision:

  • (a) In CIV-2011-404-3643 the Bank of New Zealand seeks:

    • (i) summary judgment against Stephen Osborn and Julie Alexander (as trustees of the Alexander Family Trust) and Julie Alexander personally, for $8,405,767.50 plus interest under a guarantee dated 7 December 2007; and

    • (ii) summary judgment for $187,023.68 plus interest against Mrs Alexander under another guarantee given in 2007.

  • (b) Again in CIV-2011-404-3643, the Bank of New Zealand seeks summary judgment for vacant possession of the property at 43, 45 and 47 St Stephens Avenue, Parnell, Auckland.

  • (c) In CIV-2010-404-7186 the Bank of New Zealand seeks summary judgment against Mr Osborn, or an order striking out Mr Osborn's claim.


By consent evidence from both proceedings has been used for all applications.

The Bank of New Zealand's claims

In proceeding CIV-2011-404-3643 the bank has four causes of action:

  • (a) Against Parnell Property Investments Ltd (Parnell) and St Stephens Property Investments Ltd (St Stephens) for $10,144,752.65 plus interest as the sums payable under a number of banking facilities and for vacant possession of the property at St Stephens Avenue under powers in a mortgage. It also seeks the last order against Fifer Residential Ltd;

  • (b) Against Julie Alexander judgment on a guarantee of the obligations of Parnell and St Stephens under a facility called an asset finance agreement;

  • (c) Against Stephen Osborn and Julie Alexander (as trustees of the Alexander Family Trust) and Julie Alexander personally, for $6,600,000 plus interest under a guarantee of the indebtedness of Parnell and St Stephens; and

  • (d) Against Fifer Residential Ltd (Fifer) and other occupants an order for vacant possession of the St Stephens Avenue property.


In CIV-2011-404-3643 the bank has already obtained summary judgment against Parnell and St Stephens for $9,063,788,11. Those companies are now in liquidation. The liquidators have advised that they do not oppose the orders for vacant possession.


In CIV-2011-404-3643 Mr Osborn is sued on a guarantee given by him as trustee of the Alexander Family Trust. It is common ground that his liability under the guarantee is limited to the assets of the trust. He does not face personal liability for any judgment against him under the guarantee.


On 16 December 2011 the bank advised that it no longer wished to pursue Mrs Alexander on her personal guarantee of the asset finance facility. This was not a release from the guarantee of 7 December 2007 given as trustee of the Alexander Family Trust. That claim against her remains alive.

Mr Osborn's claims

In CIV-2010-404-7186 the statement of claim by Stephen Osborn has two causes of action against the bank:

  • (a) A claim for inducing breach of contract claiming $1,074,100 as wasted expenses, $7,300,000 for loss of profit, $100,000 for stress and emotional harm and $500,000 for exemplary damages; and

  • (b) A claim for interference with trade by unlawful means seeking the same relief.


In CIV-2010-404-7186 Parnell, St Stephens and Mr Osborn initially sued the bank for breach of fiduciary duty and applied for an interim injunction to stop the bank selling the St Stephens property under the power of sale in a mortgage. Woolford J dismissed that...

To continue reading

Request your trial
2 cases
  • Noyce v Parnell Property Investments Limited
    • New Zealand
    • High Court
    • 27 August 2015
    ...3 Parnell Property Investments Ltd v BNZ, High Court, Auckland CIV-2010-404-007186, above note 1. Parnell Property Investments Ltd v BNZ [2012] NZHC 12, and see above note with interest and costs. The amount of the judgment excludes a sum claimed by BNZ of $1.606m, being the total of the fo......
  • Epsom Woods Limited v Waitakere Farms Limited
    • New Zealand
    • High Court
    • 17 June 2019
    ...tenancy agreement, enjoys occupancy rights over the land until 31 July 2040. 10 Parnell Property Investments Ltd v Bank of New Zealand [2012] NZHC 12; Alexander v Bank New Zealand [2012] NZHC 3288; Noyce v Parnell Property Investments Ltd [2015] NZHC 2037; and Fifer Residential Ltd v Noyce ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT