Mills v ASB Bank Limited [2020] NZCA 228 (11 June 2020)

Last Updated: 17 June 2020

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA506/2019 [2020] NZCA 228

	BETWEEN	LYNETTE JOY MILLS Applicant
	AND	ASB BANK LIMITED Respondent

Court:	Miller and Clifford JJ
Counsel:	Applicant in Person M V Robinson for Respondent
Judgment: (On the papers)	11 June 2020 at 10 am

JUDGMENT OF THE COURT

1. The application for leave to appeal is granted on the question of whether the District Court was correct to grant summary judgment on part of the applicant’s statement of claim.
2. The application is otherwise declined.

____________________________________________________________________

REASONS OF THE COURT

(Given by Clifford J)

[1] The applicant, Ms Lynette Mills, along with her partner, Mr Carl Peterson, is suing ASB Bank Ltd for losses she says the bank caused by defaulting on its obligations under, primarily, the Credit Contracts and Consumer Finance Act 2003 (the CCCFA) and the law of negligence.
[2] ASB applied for summary judgment, or in the alternative, that Ms Mills’ and Mr Peterson’s claim be struck out. Judge Courtney granted summary judgment in favour of ASB in respect of most of Ms Mills’ claims and struck out Mr Peterson’s claims in their entirety.^[1] Clark J dismissed an appeal by Ms Mills to the High Court,^[2] and declined an application for leave to appeal that judgement to the Court of Appeal.^[3]
[3] Ms Mills now seeks special leave to appeal to this Court.

Background

[4] The relevant background to the dispute, including the role of Mr Peterson, is described more fully in the District Court judgment at [1]–[21] and in the High Court judgment at [3]–[22]. Briefly, Ms Mills and her former partner Mr Mills had a credit facility with ASB in which they each held a mandate to operate the account independently of one another. When Mr Mills and Ms Mills separated, Mr Mills signed an agreement with Ms Mills’ new partner, Mr Peterson. The purpose of the agreement was to transfer Mr Mills’ share of the former couple’s property interests to Mr Peterson, and — in return — for Mr Peterson to pay Mr Mills a sum of money and assume liability to ASB under the shared account and relevant mortgages.
[5] Due to previous dealings with Mr Peterson that concerned ASB employees, the bank declined to advance him credit, a matter which caused him some difficulty in implementing his obligations under the agreement. In addition, while Mr Mills undertook to refrain from using the shared account for his own benefit, he was not removed as a signatory and continued to hold an independent mandate over the account.
[6] The events at issue in this litigation concern several transactions and alterations to that account conducted across the course of June and July 2015:

• (a) On 19 June 2015, Mr Peterson deposited $40,000 into the shared account, for the future use of himself and Ms Mills.
• (b) On 23 June 2015, Mr Mills directed ASB to lower the overdraft facility on the account from $50,000 to $12,000. Ms Mills was not notified of this change.
• (c) On 10 July 2015 Ms Mills was surprised to discover the new, lowered credit limit, and directed ASB to raise the facility back to $50,000.^[4]
• (d) On 14 July 2015, and following an ongoing dispute with Mr Peterson regarding his performance of obligations under the earlier agreement, Mr Mills withdrew $40,000 pursuant to his individual mandate and transferred it to his own personal account.

Losses Ms Mills and Mr Peterson say they have suffered as a result of the withdrawal of that $40,000 are at the heart of this litigation. They were also the subject of proceedings brought by Ms Mills and Mr Peterson against Mr Mills.^[5]

[7] The claims brought by Ms Mills and Mr Peterson against ASB were somewhat discursively presented in their statement of claim. Judge Courtney included a convenient summary in his judgment, which we gratefully adopt:^[6]

• (a) ASB was negligent in failing to prevent Mr Mills from dealing with the facility account jointly held with Ms Mills.
• (b) ASB breached its disclosure obligations under s 22 of the Credit Contracts and Consumer Finance Act 2003 ... to Ms Mills when the overdraft was decreased at Mr Mills’ request and subsequently to Mr Mills when the overdraft was increased at Ms Mills’ request.
• (c) ASB have acted oppressively against them, in particular by failing to consider the hardship to them in refusing to refinance.
• (d) ASB acted oppressively against Mr Peterson in failing to acknowledge him as an assignee of Mr Mills’ rights and obligations with ASB.
• (e) Reliance on a number of statutes, the law of equity and the law of torts.

[8] As noted, ASB applied for summary judgment, or in the alternative, that Ms Mills’ and Mr Peterson’s claim be struck out. Judge Courtney considered that, in summary:

• (a) Mr Peterson lacked standing as he did not have the necessary contractual relationship with ASB.^[7]
• (b) The clear terms of the Mills’ agreement with ASB (which allowed for either party to withdraw funds) and the terms of the agreement between Mr Mills and Mr Peterson (which recognised Mr Mills was still entitled to use the account, but would refrain from doing so) prevented any duty of care owed by ASB to Ms Mills from arising.^[8]
• (c) It was arguable that ASB had breached s 22 of the CCCFA by not informing Ms Mills when Mr Mills reduced the overdraft limit on their joint account.^[9]
• (d) It was not reasonably arguable that ASB had acted oppressively in refusing to refinance the overdraft or open a new “set-off account” — which could be used to repay money owing on the shared account, but which Mr Mills could not access — as ASB was under no obligation to take those steps and difficulties that had arisen were due to the personal financial position of Ms Mills and Mr Peterson.^[10]
• (e) It was not reasonably arguable that ASB had acted oppressively against Mr Peterson, as he had not established any good reason why the bank was not entitled to enforce its contractual right to refuse assignment.^[11]
• (f) The remainder of the plaintiffs’ claims were bald submission without analysis and had no obvious legal foundation.^[12]

[9] The Judge concluded:

[88] In light of the above determinations:

(a) All of Mr Peterson’s claims against ASB are struck out for disclosing no reasonably arguable cause of action.

(b) ASB is entitled to summary judgment against Ms Mills on all causes of action apart from the claim for breach of s 22 CCCFA.

(c) ASB is entitled to costs on the application which are payable according to scale 2B, excluding an allowance for second counsel. ...

[10] Ms Mills appealed; Mr Peterson did not. In the High Court, Clark J primarily considered whether ASB’s conduct could be considered oppressive. The Judge found that the statement of claim disclosed no reasonably arguable cause of action based on oppressive behaviour. The Judge noted, among other things, that:^[13]

• (a) ASB was under no obligation to refinance the Mills’ borrowing or open the kind of set-off account that ASB desired. The uncontradicted evidence of a bank officer was that Mr Peterson had frankly explained his previous unsatisfactory dealings with the bank.
• (b) Ms Mills’ assertion that ASB had acknowledged a mistake in lowering the overdraft limit was contradicted by the banks’ evidence. In any case, a simple failure to inform Ms Mills of the lowered limit could not amount to oppression. Likewise, increasing the overdraft limit could not constitute oppression considering it was requested by Ms Mills.
• (c) Allowing Mr Mills to withdraw $40,000 from the account was not oppressive as he was simply exercising his entitlement as a joint account holder. Moreover, it was a relevant part of the factual matrix that ASB warned Ms Mills and Mr Peterson about that very possibility.

[11] Clark J then briefly considered Ms Mills’ request that the costs order in the District Court be reversed, though no written or oral submissions had been advanced in support of that ground of appeal. The Judge concluded there was no reason to disturb the “relatively modest” costs award.^[14]
[12] Ms Mills sought leave to appeal to this Court on largely the same grounds as those she had advanced before the High Court. A further point was also raised: Judge Courtney had wrongly granted ASB summary judgment on only part of Ms Mills’ statement of claim, contrary to r 12.2 of the District Court Rules 2014 which provided that summary judgment was only available if none of the causes of action could succeed. Clark J acknowledged that, at first glance, this argument had some merit.^[15] However, the Judge concluded that the error was “more one of form than substance” which did not reach the high threshold for leave.^[16] Ms Mills’ application was dismissed.

Submissions

[13] In submissions on her application for leave, Ms Mills repeated her challenge based on the apparent misapplication by the District Court of r 12.2. Seemingly in reliance on that first submission, she also challenged the costs award and questioned how it was appropriate for costs to be awarded to ASB when, she submitted, ASB’s claim for summary judgment ought to have failed, and did fail in relation to her claim under s 22 of the CCCFA. Ms Mills also submitted that this Court should re‑examine the meaning of “oppressive” under the CCCFA and suggested that the courts below did not give sufficient consideration to, among other matters, the lender responsibility principles at s 9C of the CCCFA when considering whether ASB’s conduct met that threshold.
[14] For ASB, Mr Robinson conceded that the District Court had erred in granting summary judgment but relied upon Clark J’s determination that the error was one of form rather than substance, given the statement of claim did not plead any causes of action in a conventional way and did not identify any reasonably arguable cause of action that ASB had acted oppressively. The point was therefore not a matter significant enough to warrant a further appeal. As to the costs award, this was well within range considering ASB had prevailed on by far the greater part of its application and there was no arguable error of law in that respect.

Analysis

[15] The relevant leave threshold is this Court’s well-known statement in Waller v Hider that:^[17]

The appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal. ...

Upon a second appeal this Court is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a Court.

Summary judgment on Ms Mills’ claims

[16] The power to give summary judgment is provided for by r 12.2 of the District Court Rules 2014:

12.2 Judgment when there is no defence or when no cause of action can succeed

(1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to any cause of action in the statement of claim or to a particular cause of action.

(2) The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff’s statement of claim can succeed.

[17] As this Court explained in Westpac Banking Corp v MM Kembla New Zealand Ltd, an application for summary judgment by the defendant is distinct from an application for strike-out, or an application for summary judgment by the plaintiff:^[18]

[58] The applications for summary judgment were made under r 136(2) of the High Court Rules which permits the Court to give judgment against the plaintiff “if the defendant satisfies the Court that none of the causes of action in the plaintiff’s statement of claim can succeed”.

[59] Since r 136(2) permits summary judgment only where a defendant satisfies the Court that the plaintiff cannot succeed on any of its causes of action, the procedure is not directly equivalent to the plaintiff’s summary judgment provided by r 136(1).

[60] Where a claim is untenable on the pleadings as a matter of law, it will not usually be necessary to have recourse to the summary judgment procedure because a defendant can apply to strike out the claim under r 186. Rather r 136(2) permits a defendant who has a clear answer to the plaintiff which cannot be contradicted to put up the evidence which constitutes the answer so that the proceedings can be summarily dismissed. The difference between an application to strike out the claim and summary judgment is that strike-out is usually determined on the pleadings alone whereas summary judgment requires evidence. Summary judgment is a judgment between the parties on the dispute which operates as issue estoppel, whereas if a pleading is struck out as untenable as a matter of law the plaintiff is not precluded from bringing a further properly constituted claim.

[18] In the District Court, Judge Courtney recorded that ASB has conceded before him that it was arguable the bank had technically breached its disclosure obligations under s 22 of the CCCFA by not giving Ms Mills prior notification of the reduction in the account’s credit limit.^[19] He therefore concluded ASB had not established a complete legal answer to Ms Mills’ claim on that ground.
[19] Nonetheless, after concluding that ASB had a good defence to all of Ms Mills’ other causes of action, the Judge determined that “ASB is entitled to summary judgment against Ms Mills on all causes of action apart from the claim for breach of s 22 CCCFA”.^[20] As is clear on the face of r 12.2(2), and the principles expressed by this Court’s judgment at [17] above, it was not possible for ASB to obtain summary judgment against Ms Mills once the Judge concluded that her cause of action under the CCCFA was tenable. As Clark J recognised in the High Court and Mr Robinson conceded in submissions before this Court, this was plainly an error by the Judge.

An error justifying a second appeal?

[20] The error appears to have been raised for the first time before Clark J in the application for leave to appeal to this Court. She acknowledged the District Court had erred but considered a second appeal was not warranted:^[21]

[19] Nevertheless, I do not consider the error raises a question of law of sufficient importance to justify the grant of leave to bring a second appeal to the Court of Appeal. The error in this case is more one of form than substance. I immediately acknowledge that in some contexts, the wrongful grant of summary judgment may go to jurisdiction. But in this case, the key point is that all but one of Ms Mills’ claims failed in the District Court and her appeal to the High Court was unsuccessful. Beyond the summary judgment ground, no question of law capable of bona fide argument is raised. The summary judgment ground cannot overcome the fact that (with the s 22 CCCF Act exception), Ms Mills’ causes of action were not capable of argument. Ms Mills can have no realistic hope of benefit from a second appeal.

[20] The summary judgment ground is not, therefore, of sufficient importance to outweigh the cost and delay of a second appeal.

[21] A further impediment to Ms Mills’ application for leave to appeal is that the summary judgment ground is raised for the first time in a second appeal context.

[21] While we accept that ASB may ultimately show that it has a good defence to the greater part of Ms Mills’ claims, we are not convinced that the error below was a matter of form rather than substance. Had the District Court correctly applied r 12.2(2) the result would have been that ASB’s application for summary judgment would have failed in its entirety. The question would then arise whether ASB’s application (presented in the alternative) to strike out Ms Mills’ causes of action succeeded.^[22] But that application was not determined by the Judge. Nor can it be assumed that the Judge would have struck out the causes of action he purported to grant summary judgment on, given the distinct threshold for a strike-out application and the fact that he considered evidence adduced by ASB in support of the summary judgment application which would not be considered in a strike-out application.^[23]
[22] As it stands, ASB obtained summary judgment on several causes of action when it was not properly entitled to do so. As noted by Elias CJ in Westpac Banking Corp, a grant of summary judgment for the defendant raises an issue estoppel and Ms Mills is therefore prevented from bringing a further properly constituted claim.^[24] Regardless of the substantive merits of her claims, Ms Mills has been unfairly prejudiced insofar as most of her causes of action have permanently failed without a proper legal basis.
[23] As against this, we return to the observation in Waller v Hider that on a second appeal this Court is not engaged in the general correction of error, and not every error will be of sufficient importance, either generally or to the parties, to warrant a further appeal.^[25] While the proposed appeal is of limited public importance given the established principles for applications for summary judgment in favour of a defendant, the erroneous failure of the greater part of Ms Mills’ claim is clearly of significant importance to her and we are not prepared to conclude, on the necessarily limited submissions before us, that it will necessarily fail.
[24] We therefore grant leave to appeal on this ground.

Ms Mills’ other proposed grounds of appeal

[25] If the point on which we have granted leave is decided in Ms Mills’ favour, ASB’s challenges to Ms Mill’s claims will return to the District Court. Accordingly, the remaining grounds of appeal raised by her will become moot. Notwithstanding, we briefly consider the remaining matters raised in her application for leave.
[26] First, Ms Mills challenged the costs awards in the District Court which, she suggested, gave insufficient regard to her partial success in defending ASB’s application for summary judgment. Ms Mills also appeared to question the validity of the award considering the alleged errors of law discussed above at [16]–[24]. This misses the point: regardless of whether the Judge was correct to grant summary judgment for ASB on most of Ms Mills’ statement of claim, once the Court had made that determination it was entirely proper for costs to follow the event in circumstances where Mr Peterson’s entire claim was struck out and summary judgment was granted for the larger part of her claim. If Ms Mills’ appeal to this Court is successful then the issue of costs in the District Court may be reopened. Until that time, however, there is no reasonably arguable error.
[27] Second, Ms Mills sought to appeal on the question of the definition of “oppressive” behaviour under the CCCFA. She suggested the District Court and High Court wrongly interpreted “oppressive”, which is defined at s 118, by overlooking the relevance of the lender responsibility principles at s 9C.^[26] A similar submission that ASB had breached s 9C was raised for the first time before Clark J, who refused to consider it considering the matter had not been raised in the District Court.^[27] In any case, the District Court and High Court both applied established principles relating to oppression in an uncontroversial way. Ms Mills has not raised a reasonably arguable error and we decline leave accordingly.
[28] Ms Mills’ other claims, including the suggestion that the Judges below were “wilfully blind” to the requirements of the CCCFA, are entirely without foundation and should not have been made. We say no more about them.

Result

[29] Ms Mills is granted leave to appeal on the question of whether the District Court was correct to grant summary judgment on part of her statement of claim.
[30] The application is otherwise declined.

Solicitors:
Simpson Grierson, Auckland for Respondent

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^[1] Peterson v ASB Bank Ltd [2018] NZDC 14505 [District Court judgment].

^[2] Mills v ASB Bank Ltd [2019] NZHC 1505 [High Court judgment].

^[3] Mills v ASB Bank Ltd [2019] NZHC 2383 [Leave judgment].

^[4] ASB in fact erroneously raised the limit to $52,000.

^[5] Peterson v Mills DC Tauranga CIV-2015-070-622.

^[6] District Court judgment, above n 1, at [16].

^[7] At [45]–[48].

^[8] At [60].

^[9] At [68]; and see above at[6(b)].

^[10] At [78]–[79].

^[11] At [84].

^[12] At [85]–[87].

^[13] High Court judgment, above n 2, at [76].

^[14] At [80].

^[15] Leave judgment, above n 3, at [17].

^[16] At [19].

^[17] Waller v Hider [1997] NZCA 221; [1998] 1 NZLR 412 (CA) at 413.

^[18] Westpac Banking Corp v MM Kembla New Zealand Ltd [2000] NZCA 319; [2001] 2 NZLR 298 (CA).

^[19] District Court judgment, above n 1, at [67].

^[20] At [88(b)].

^[21] Leave judgment, above n 3.

^[22] District Court judgment, above n 1, at [17].

^[23] That evidence included an affidavit provided by Ms Cotton, customer services supervisor at the bank, who described her interactions with Ms Mills and Mr Peterson.

^[24] Westpac Banking Corp v MM Kembla New Zealand Ltd, above n 18, at [60].

^[25] Waller v Hider, above n 17, at 413.

^[26] Clark J declined to consider a similar contention raised as an appeal point before her, namely that ASB was liable for breaching s 9C of the CCCFA: High Court judgment, above n 2, at [51].

^[27] At [46].