ANZ National Bank Limited v Watson [2012] NZHC 2863 (1 November 2012)

Last Updated: 21 December 2012

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2012-454-490 [2012] NZHC 2863

BETWEEN ANZ NATIONAL BANK LIMITED Plaintiff

AND ROBERT CHARLES WATSON First Defendant

AND TRACY ALISON WATSON Second Defendant

Hearing: 31 October 2012

(Heard at Palmerston North)

Counsel: D. Shephard - Counsel for Plaintiff

No appearance for the First Defendant

No appearance for the Second Defendant

Judgment: 1 November 2012

_{JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL}

Pursuant to r 11.5 of the High Court Rules I direct the Registrar to deliver this judgment at 3.00 pm on 1 November 2012.

_{Solicitors: Gibson Sheat, Lawyers, PO Box 2966, Wellington}

ANZ NATIONAL BANK LIMITED V RC & TA WATSON HC PMN CIV-2012-454-490 [1 November 2012]

Introduction

[1] The plaintiff bank applies for summary judgment against the first defendant and the second defendant to recover a loan shortfall following the sale of several properties owned by the defendants which were subject to mortgages to the plaintiff.

[2] Although there is no formal opposition to the summary judgment application, nor any statement of defence filed by the defendants, they have provided certain correspondence to the Court regarding the claims against them. For present purposes in accordance with their request to do so, I will regard that correspondence as an effective opposition to the present summary judgment application.

[3] At the hearing of this matter before me on 31 October 2012, there was no appearance by or for the first defendant or the second defendant. They did confirm, however, at para 1 of their letter to the Court dated 26 October 2012 that they would not be attending the hearing but, as noted above, they requested the Court, in making the decision on the present application to take into consideration the contents of the various letters they had provided to the Court in this proceeding. There was an appearance by Mr Shephard as counsel for the plaintiff however.

Background Facts

[4] Between November 2006 and October 2008 the defendants borrowed various sums from the plaintiff bank secured by way of mortgages against their home and several other properties. These included ultimately home and housing loan facilities of about $707,000.00, a further home loan of $39,726.00 and other advances. A range of transactions had occurred previously whereby parts of original loan advances were repaid, the total loans owing reduced, and new advances made.

[5] Around February 2009 the defendants fell into default with respect to their obligations to the plaintiff under the then outstanding loan agreements. Various properties were sold by the defendants and the sale proceeds applied towards repayment of the home loans and additional facilities.

[6] This, however, left a shortfall of debt owing to the plaintiff of a little over

$354,000.00. Demand for repayment of the shortfall was made by the plaintiff around 1 February 2010.

[7] As at 11 January 2012 the amount outstanding from the defendants by way of shortfall debt to the plaintiff totalled $679,643.05. It is this amount together with interest and costs which the plaintiff now seeks by way of summary judgment from the defendants.

Summary Judgment Principles

[8] The application before me is one for summary judgment on which r 12.2(1) High Court Rules applies. Rule 12.2(1) provides:

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 a cause of action in the statement of claim or to a particular part of any such cause of action.

[9] The principles of summary judgment have been recently summarised by the Court of Appeal in Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [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 take 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 a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

[10] Therefore, the present application for summary judgment can only succeed if I am satisfied that the defendants have no arguable defence to the claim for repayment of the outstanding debt.

Parties’ Submissions

[11] From the plaintiff ’s statement of claim, supporting affidavit of Katherine Emma Ryan dated 12 July 2012 and memoranda filed by counsel for the plaintiff in both cases dated 24 October 2012 I am satisfied that the plaintiff here has done enough to show that on its face there is no real doubt or uncertainty that the defendants are indebted to the plaintiff under the various loan contracts for the amount sought in the statement of claim. The loan documentation is clear. The fact that moneys were borrowed by the defendants, were not fully repaid and substantial amounts remain outstanding and overdue is not questioned in any real way.

[12] But, I will turn now to the correspondence which has been provided to the

Court by the defendants representing the following:

(a) Letter dated 1 October 2012 from the defendants to the Palmerston North Registry of this Court together with a supporting medical certificate.

(b) Letter dated 26 October 2012 from the defendants to the Palmerston North Registry of this Court including copies of certain emails, a salary payroll slip and a copy of a termination clause within Mr Watson’s employment contract.

(c) Copy of a complaint letter dated 21 January 2011 from the defendants to the office of the Banking Ombudsman (filed in this proceeding on

29 October 2012) together with supporting attachments with regard to that complaint.

[13] As I have indicated at the outset of this judgment, in their letter to the Court dated 26 October 2012, the defendants indicated they would not be attending the hearing of the summary judgment application on 31 October 2012 but wished the Court to take into account the contents of all the material they had provided to the Court.

[14] I have now had an opportunity to consider in detail all that material in reaching this decision and have taken into account all the matters raised by the defendants.

[15] Much of that material in my view however is of limited relevance to the application before me.

[16] Essentially as I understand the position, the defendants raise a complaint against an officer of the Bank (Mr Scott Hodge) who they say provided advice to them to enter into property transactions and the attendant borrowing from the plaintiff bank which they say has been the cause of their present downfall.

[17] Indeed, on p 2 of their 26 October 2012 letter to the Court the defendants state:

We have lost all of our money that we bought to New Zealand through the properties

and following Scott Hodge’s advice and the decline in the property market.

and

We reiterate that we stand by the fact that all we ever did was what Scott Hodge and the National Bank authorised us to do.

[18] Their most recent letter to the Court dated 26 October 2012 goes on to outline their income position and to contend that eventually if bankruptcy proceedings are taken against them, Mr Watson will lose his job and “we will be destitute”.

[19] The matter before me, of course, is simply an application for summary judgment. It is not a bankruptcy proceeding.

[20] As to the defendants’ broad complaints against Mr Hodge, there is certainly no independent or verified evidence before the Court regarding any improper part which Mr Hodge or any officers of the plaintiff bank may have played in the various property purchases undertaken by the defendants.

[21] From the complaint correspondence to the Banking Ombudsman, the defendants appear to repeat their claim that they followed the “advice and instructions” of their Bank Manager, Mr Scott Hodge at all times. The defendants do acknowledge however that the remaining debt has accrued due to lending secured on four properties which they freely acquired. One of these was their own home in Havelock North. The other three involved the construction of two small houses and the renovation of a third house, they say all with the “intention of selling immediately at a profit”. And interestingly, a letter the defendants have included as “Attachment I” (to their submission to the Banking Ombudsman) from their accountant at the time Mr Tony Lane to the plaintiff dated 12 June 2009 states:

The Watsons emigrated from London 3 years ago and on arrival had $500,000.00 cash in hand. They purchased a home in Havelock North and entered into speculative property development in Napier. It subsequently transpired that they were led astray be a less than reputable real estate agent together with a builder.

[22] From what material is before the Court it does seem that the defendants were unable to sell the properties in question at a profit, and as they were unable to repay the bank debt in full the current long overdue amount outstanding remains.

[23] And it seems that Mr Scott Hodge, who the defendants say had been involved in approving their loans on behalf of the plaintiff, left the employment of the bank some time in 2009.

[24] Whilst there must be some sympathy expressed for the unfortunate position in which the defendants now find themselves, there is no real evidence of any kind before the Court to dispute the quantum of the plaintiff’s claim for the outstanding loans and accruing interest in terms of the loan agreements. No claims are made that the plaintiff bank acted in any way improperly in calling up the long outstanding loans. It was the defendants themselves who actually sold the properties finally, rather than any mortgagee sale process undertaken by the plaintiff. Nor is there anything by way of evidence before me other than a general complaint from the defendants that the plaintiff bank financed their acquisition of the various properties all of which were subsequently sold at a loss.

[25] The evidence before the Court here shows that there is no real defence to the

plaintiff’s claim.

[26] The plaintiff’s summary judgment application must therefore succeed.

Orders

[27] An order is now made by way of summary judgment in favour of the plaintiff against the first defendant and the second defendant as follows:

(a) Amount claimed in plaintiff’s statement of claim $679,643.05 (b) Interest on the judgment sum at the default

Contractual rate under the loan agreements of

16.95% p.a. from 11 January 2012 to

1 November 2012 (295 days at $315.61 per day) $ 93,104.95

(c) Costs on a solicitor/client basis in terms of the Contractual arrangements under the Loan Agreements as outlined in the affidavit of Holly Ann Ball dated 25 October 2012 filed

herein totalling $ 4,720.18

(d) Disbursements being the following:

Filing Fee $1,329.20

Service Fees $ 241.50

Sealing Fee $ 48.30

_{$1,619.00 $ 1,619.00}

_$779,087.18

‘Associate Judge D.I. Gendall’