Gerritsen v ASB Bank Limited [2014] NZHC 2755 (6 November 2014)

Last Updated: 18 November 2014

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2014-419-000233 [2014] NZHC 2755

BETWEEN	RICHARD ANTHONY GERRITSEN Appellant
AND	ASB BANK LIMITED Respondent

Hearing:	20 October 2014
Appearances:	Appellant in person R Wood for Respondent
Judgment:	6 November 2014

_{JUDGMENT OF WOOLFORD J}

This judgment was delivered by me on Thursday, 6 November 2014 at 2.00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitor: R S Wood, Solicitor, PO Box 6422, Hamilton

_{Copy to: R A Gerritsen, Hamilton}

RICHARD ANTHONY GERRITSEN v ASB BANK LIMITED [2014] NZHC 2755 [6 November 2014]

Introduction

[1] The appellant, Mr Gerritsen, is in a long running dispute with the ASB Bank (the bank) over credit card debts incurred with the bank. He says he is able to pay the debts, but the bank has failed to provide him with the original instrument of indebtedness in its original form (or OIoIiiOF, to use Mr Gerritsen’s abbreviation). He has a number of complaints as well, including a complaint that letters of demand from the bank were forgeries.

[2] In this proceeding, Mr Gerritsen appeals against a judgment of Judge P R Spiller in the Hamilton District Court dated 8 May 2014 in which he was ordered to pay $12,403.47 plus costs to the bank.¹

District Court judgment

[3] After setting out the nature of the claim, Judge Spiller reviewed the background facts. On application by Mr Gerritsen, he received two credit cards issued by the bank – a Visa card in 2007 and a MasterCard in 2008. In each case, the terms and conditions sent to Mr Gerritsen at the same time as the cards provided that by using the cards he agreed to be bound by the terms and conditions.

[4] Judge Spiller then reviewed the use of the cards by Mr Gerritsen, including his failure to make minimum payments due and exceeding the credit limit. Judge Spiller also referred to the correspondence between Mr Gerritsen and the bank before the bank refused to renew the Visa card and cancelled the MasterCard in November

2011.

[5] Judge Spiller then turned to Mr Gerritsen’s arguments. He noted Mr Gerritsen’s argument that the bank, in responding to his offers to settle, failed to link the amounts claimed to a unique and easily identifiable credit account number. He also noted Mr Gerritsen’s argument that the bank had no claim against him that was enforceable by the District Court as the bank had failed to take any proper steps to resolve the matter prior to litigation and failed to provide the Court with the

_{proper evidential basis for his claim. He recorded that Mr Gerritsen accepted that}

¹ ASB Bank Limited v Gerritsen DC Hamilton CIV-2012-019-000548, 8 May 2014.

the Bills of Exchange Act 1908 did not govern credit card transactions, but referred to Mr Gerritsen’s argument that the burden rested on the bank to disclose the law upon which it was able to rely in order to enforce its irregular claim, which had been pursued in an irregular way.

[6] Judge Spiller found, however, that there was a binding contract between Mr Gerritsen and the bank. He found that the bank had disclosed to Mr Gerritsen the amounts owing against the specific credit card accounts that he had used, in that the bank’s response to Mr Gerritsen’s letters had sufficiently linked the amounts claimed to easily identifiable credit card account numbers, bearing in mind the security measures to protect Mr Gerritsen’s interests. Judge Spiller also found that the bank had taken proper steps to resolve the matter prior to litigation and had provided the Court with the proper evidential basis for its claim. He accordingly directed Mr Gerritsen to pay $12,403.47 together with costs to the bank.

Appellant’s submissions

[7] On appeal, Mr Gerritsen repeats much the same arguments. As best as I can ascertain, his arguments are as follows:

(a) The bank has not provided an invoice or the OIoIiiOF. Without these documents, the bank is unable to establish his liability for the credit card debts.

(b) The bank has failed to link the claimed amounts to a unique and easily identifiable credit card account number. The debts therefore cannot be linked to him.

(c) The bank has never issued a proper notice of demand because the notices he received failed to identify the person making the demand or were signed by someone over the typed name of another person. They were therefore forgeries.

(d) He has offered to settle the credit card debts in accordance with s 52(4) of the Bills of Exchange Act, which he says is applicable,

notwithstanding the concession made by him and recorded by Judge Spiller that the Act did not apply to credit card transactions. If the Bills of Exchange Act does not apply, he says the bank has failed to identify which law governs such transactions. Without the governing law being identified, he says he cannot be held liable for the debts.

The applicable law

[8] The Bills of Exchange Act is not applicable to credit card transactions.² A

bill of exchange is defined in the Act as:³

an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person, or to bearer.

[9] A common type of a bill of exchange is a cheque, which is a bill of exchange drawn on a banker, payable on demand. Accordingly, the Act regulates the drawing, negotiation, crossing and presentation of cheques and the associated liabilities of the parties involved, but not credit card transactions.

[10] It is quite obvious that a credit card transaction receipt does not meet the definition of a bill of exchange. On its inception, a bill of exchange requires three parties: the drawer, the drawee and the payee. The drawer is the person who draws the bill and gives the order to pay money to a third party. The drawee is the person upon whom the bill is drawn. He or she is the person to whom the bill is addressed and who is ordered to pay. The drawee need not be different to the drawer. Thus the drawer may draw on himself, payable to his own order. The third party required on inception of the bill of exchange is the payee. The payee is the party in whose favour the bill is drawn or is payable.

[11] A credit card transaction only involves two parties – the merchant who supplies the goods or services and the cardholder. The merchant has a separate

_{contract with the bank. A credit card transaction receipt is not addressed by one}

² Bill Bevan, Bob Dugan & Virginia Grainer Consumer Law (Lexis Nexis, Wellington, 2009) at

_[7.19].

³ Bills of Exchange Act 1908, s 3.

person to another. Many credit card transactions do not involve a signature. While the transaction is for a certain sum as between the merchant and the cardholder, the amount received by the merchant from the bank is not and depends on various calculations set out in the separate contract with the bank. A cardholder is required to make a minimum payment at a fixed or determinable future time, but the level of such payment depends on the total amount of credit advanced by the bank.

[12] Credit card transactions are however subject to the Credit Contracts and

Consumer Finance Act 2003. In particular they are characterised as revolving credit contracts, which are defined as contracts that:⁴

	(a)	anticipate multiple advances, to be made when requested by the debtor in accordance with the contract; and
	(b)	does not limit the total amount to be advanced to the debtor under the contract.
[13]	As	noted, basic contract law applies to the relationship between the

cardholder and the bank. The cardholder obtains credit advances by way of cash payments through an ATM or by way of retail purchases of goods or services on request from a merchant. The total credit advanced to the cardholder is not limited provided he/she makes regular repayments and does not exceed his/her credit limit. Credit services offered in connection with credit cards must comply with the Credit Contracts and Consumer Finance Act, which imposes disclosure obligations on the bank, regulates credit and prepayment fees and provides the debtor with defences based on disclosure errors, unconscionability and hardship. Mr Gerritsen does not however seek to avail himself of the consumer protection provisions of the Credit Contracts and Consumer Finance Act in this case.

Discussion

[14] As noted above, the Bills of Exchange Act is not applicable to credit card transactions. Nonetheless, Mr Gerritsen submits that the bank has failed to comply

_{with s 52(4) of the Act. This provides:}

⁴ Credit Contracts and Consumer Finance Act 2003, s 5.

(4) When the holder of a bill presents it for payment, he shall exhibit the bill to the person from whom he demands payment, and when a bill is paid the holder shall forthwith deliver it up to the party paying it.

[15] It is unclear what Mr Gerritsen has characterised as a bill of exchange. In this instance it does not seem to be the credit card transaction receipt, but rather the notices of demand made by the bank of Mr Gerritsen to pay the credit card debts. Here, Mr Gerritsen brings in the concept of an original instrument of indebtedness in its original form (OIoIiiOF). He says he will not pay without it being presented to him.

[16] In this case the terms and conditions of Mr Gerritsen’s use of the credit cards

are in evidence. They specifically state at the outset:

You agree to be bound be these Conditions of Use by using your Card.

These then form the basis of the relationship between Mr Gerritsen and the bank. The terms and conditions specifically require Mr Gerritsen to repay all credit given to him. Clause 9(1) provides:

You must repay all credit we give to you for Transactions incurred with your Card in accordance with these Conditions of Use and all other credit, interest and charges debited to your Card Account, whether or not arising from the use of your Card. You must also pay:

 Interest and any late payment fee or over limit fee;

 Any fees and costs arising from the issue or use of any Card;

 Any costs associated with the collection of amounts overdue for payment on the Card Account (including tolls, collection agent’s costs and legal fees on a solicitor/client basis);

 Any fees charged by us in relation to payments made by cheque and automatic payment to the Card Account which are dishonoured;

 Any statutory duty, levy or charge incurred in relation to

Transactions.

 Any direct costs incurred by us in investigating an unauthorised or disputed Transaction, if that unauthorised or disputed Transaction, after investigation by us, is regarded by us as being an authorised Transaction.

[17] Mr Gerritsen does not dispute that he undertook the transactions shown on the various credit card statements in evidence nor does he dispute the interest charged or the late payment fees levied.

[18] The bank is not required to provide an invoice or an OIoIiiOF. Quite simply, such a claim is without any merit. The relationship between Mr Gerritsen and the bank is governed by the terms and conditions. The terms and conditions provide that the bank will make available a monthly statement to Mr Gerritsen. These have all been supplied to Mr Gerritsen. These statements show a monthly closing balance together with the amount of a minimum payment due as well as the date that that minimum payment is due. The interest rate is shown as well as the credit limit and the available credit. The later statements also note that for security reasons, Mr Gerritsen’s full card number was no longer displayed on statements. The contractual basis between Mr Gerritsen and the bank are the terms and conditions and not an original instrument of indebtedness in its original form (OIoIiiOF), whatever that may mean.

[19] As to Mr Gerritsen’s argument that the bank has failed to link the claimed amounts to a unique and easily identifiable credit card account number, I note that the bank, for security reasons, no longer displays the full credit card number on statements and other correspondence. There are normally some numbers shown, with the other numbers represented by four or more X’s. However, in correspondence with the bank, Mr Gerritsen used the full credit numbers and was obviously aware that the bank was initiating debt collection procedures in relation to them. Moreover, I note that in some correspondence from the bank, for instance, the letter to Mr Gerritsen, dated 3 February 2012, the bank sets out the credit card account numbers in full. There is no doubt that the debts are those of Mr Gerritsen.

[20] Finally, Mr Gerritsen is correct in identifying the fact that some letters from the bank contained a signature, but no name, often with the words “for and on behalf of ASB” under the signature. On other letters it appears that the bank officers have signed above another person’s typed name. These are not forgeries. The correspondence was clearly all from the bank. It is not unusual for a person in a corporate entity to sign a letter on behalf of someone else who has perhaps overall

responsibility for the file. People often act with delegated authority and there is nothing in the present case to suggest any irregularity.

Result

[21] In all the circumstances, the appeal is dismissed. The bank is entitled to costs on a 2B basis. Mr Gerritsen is advised to talk to the bank to make arrangements to pay the credit card debts, as he says he can do. Mr Gerritsen has clearly obtained the benefit of the goods and services, which he paid for using his credit cards.

.....................................

Woolford J