ANZ BANK NZ LTD v FROST & SUTCLIFFE [2014] NZHC 1640

ANZ BANK NZ LTD v FROST & SUTCLIFFE [2014] NZHC 1640 [14 July 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-404-001380[2014] NZHC 1640BETWEEN ANZ BANK NEW ZEALAND LIMITEDPlaintiffAND FROST & SUTCLIFFEDefendantHearing: 19 June 2014Counsel: MJ Tingey and NFD Moffatt for PlaintiffP Hunt and D Turnbull for DefendantJudgment: 14 July 2014JUDGMENT OF ASHER JThis judgment was delivered by me on Monday, 14 July 2014 at 3pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Bell Gully, Auckland.McElroys, Auckland.Introduction[1] On 2 March 2006 the National Bank of New Zealand (now the plaintiff, theANZ Bank) forwarded a discharge of mortgage to Frost & Sutcliffe solicitors on thebasis that they would not release it until Frost & Sutcliffe's client had executed areplacement security and Frost & Sutcliffe's solicitor's certificate was available.Frost & Sutcliffe, however, released the discharge without obtaining an executedreplacement security and without making available a solicitor's certificate.[2] In this proceeding the ANZ Bank claims against Frost & Sutcliffe on thebasis of breach of undertaking and breach of contract. There was also a claim basedon negligence which the ANZ Bank says will not be pursued if this application issuccessful. In an interlocutory judgment of 21 February 2014, at the request of theANZ Bank, Associate Judge Abbott struck out Frost & Sutcliffe's affirmativedefence of contributory negligence against the ANZ Bank. The Associate Judge,however, dismissed ANZ's application for further particulars of Frost & Sutcliffe'sdefence based on lack of causation.[3] Both Frost & Sutcliffe and the ANZ Bank have applied to review thejudgment, each challenging the decisions that were determined adversely againstthem.Background[4] In November 2005 the National Bank of New Zealand (now the ANZ Bank) had advanced $976,000 on a first registered mortgage over a property at 10Middlemore Road, Otahuhu. The mortgagor, Twenty-First Century Ltd, was a clientof Frost & Sutcliffe. The sole director of Twenty-First Century was Duong Hai Hawho guaranteed the mortgage.[5] It was then agreed between the ANZ Bank, Twenty-First Century and Mr Hathat the terms of the loan would be varied to enable the sale of the Middlemore Roadproperty, and this would include substitution of a property in Alfriston Road for theMiddlemore Road property as security for the loan.[6] On 24 February 2006, Frost & Sutcliffe wrote to the ANZ Bank seeking a discharge of the mortgage on the basis that they undertook not to deal with thedocuments until they had accounted to the ANZ Bank for all monies it required to bepaid under the mortgage.[7] On 2 March 2006, the ANZ Bank responded in a letter I will consider indetail. The ANZ Bank agreed to discharge the mortgage provided that Frost &Sutcliffe did not release the discharge documents until the replacement security hadbeen executed and its solicitor's certificate was available.[8] At the same time a general letter of instructions to Frost & Sutcliffe was sentby the ANZ Bank. That letter has not been found by either the ANZ Bank or Frost &Sutcliffe. For the purposes of the application it has been accepted that the letterwould have been sent in the form of a standard template letter of instructions onsimilar terms to letters of instructions given at the time.[9] Despite the express instruction of 2 March 2006 Frost & Sutcliffe releasedthe discharge of mortgage with a transfer of Middlemore Road to the purchaser ofthat property, and the sale of Middlemore Road proceeded. No replacementmortgage was executed over the Alfriston Road property. Frost & Sutcliffe did nothave available or provide to the ANZ Bank a solicitor's certificate. Frost & Sutcliffethen released the net proceeds of sale to Twenty-First Century. The effect of this wasto leave the ANZ Bank unsecured.[10] Frost & Sutcliffe accepts that it did not have authority from the ANZ torelease the discharge before it held the executed replacement security. It accepts thatit was in breach of contract in failing to do so.[11] Twenty-First Century was put into liquidation in October 2011. Mr Ha has been adjudicated bankrupt. Because the mortgage had not been executed, the ANZBank was an unsecured creditor and sought to prove in the liquidation for$922,388.78. There is no prospect of any recovery from the liquidation. Tocompound the ANZ Bank's difficulties the liquidators have sought the recovery ofpayments totalling $248,252.95 made to the ANZ Bank by Twenty-First Century, alleged to be a voidable transaction.The strike out of the contributory negligence defence[12] Frost & Sutcliffe pleaded that any loss that flows from its breach of contract is subject to a deduction for contributory negligence by the ANZ Bank. The ANZ Bank says that this defence cannot be raised in answer to claim for breach of a strictcontractual obligation, and that the letter of 2 March 2006 imposed such anobligation on Frost & Sutcliffe. Frost & Sutcliffe say in answer that the retainer didnot impose a strict obligation, but rather a contractual duty to exercise the care of aprudent and competent solicitor, and that as a consequence the defence must beavailable.[13] The Associate Judge accepted the ANZ Bank's argument. After traversingthe relevant statutory authority and case law, he accepted that a Court should be slowto pass the whole risk of breach over to a solicitor in the absence of clear language.However, he determined that there was clear language in the letter which imposedstrict liability. It being one of those "rare cases" imposing strict liability, theaffirmative defence of contributory negligence was not available.Approach to strike out and judicial review[14] Like the Associate Judge I apply the statement of principles applying to strike out set out in Attorney-General v Prince:1(a) The Court proceeds on the basis that the facts pleaded in the statement of defence are true.(b) The defence will be struck out where it is clearly so untenable that itcannot succeed.(c) The jurisdiction is one to be exercised sparingly.1 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 267, endorsed by the Supreme Court inCouch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].(d) The Court can exercise this power even where it requiresdetermination of difficult questions of law, requiring extensiveargument.[15] I add that it has become clear from recent decisions that if the area of law isdeveloping, and there is a possibility that a claim or defence could succeed, then theproceedings should not be struck out.2[16] Frost & Sutcliffe have the burden of persuading the Court that the AssociateJudge's decision was wrong in that it rested on unsupportable findings of fact orapplied the wrong principles of law.3 The Court's will apply the approach of Austin,Nichols & Co Inc v Stichting Lodestar and will make its own assessment on thematerial before it.4The decision[17] In a carefully reasoned judgment, the Associate Judge analysed thecommentary and case law in New Zealand and England relating to the availability ofa plea of contributory negligence. He noted that the ANZ Bank undertook not topursue its claim in negligence if the defence of contributory negligence was struckout in relation to the claim in contract. He observed:5Commentators have summarised the outcome of these cases as follows:(a) Professional retainers do not normally impose strict duties to achieve a specified result. Instead, a strict duty will be imposed only where justified by an express undertaking or by necessary implication from the facts. Otherwise the retainer will be construed as imposing a duty of care.(b) An instruction to a professional will normally be construed as defining scope of the duty of care rather than imposing a strict duty unless it is clear that the instruction is intended to create an independent strict duty.(c) Most cases have concluded that the duties imposed on solicitors by express instructions from lending institutions and the undertakings that2 Couch v Attorney-General, above n 1, at [33]; Blain v Evan Jones Construction Ltd [2013] NZCA 680 at [19].3 Midland Metals Overseas Pte Ltd v Christchurch Press Co Ltd (2002) 16 PRNZ 107 (HC) at [13].4 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.5 ANZ Bank NZ Ltd v Frost &Frost & Sutcliffe [2014] NZHC 245 at [33].the institutions require are qualified (by a duty to use reasonable care and skill) rather than absolute obligations, and it is likely to be a rare case where a court will impose an absolute obligation.(d) Notwithstanding that it is likely to be in rare cases only, the court willfind that a solicitor's obligation is strict (and regardless of whether thesolicitors were at fault) where that is the proper construction of the retainer.(footnotes omitted)[18] He found that the case was one of the "rare cases" for imposing strictliability.6 He considered that the instruction from the bank was unqualified andimposed a strict obligation upon Frost & Sutcliffe to observe its terms. Heconcluded that the affirmative defence of contributory negligence was not available,and that the strict obligation imposed excluded any application of common lawprinciples by way of analogy.7 Given his finding that the defence was clearly notavailable, he considered it appropriate to strike out that cause of action even thoughit did not resolve the case as a whole.[19] In relation to the request for an order for particulars, the Associate Judgedealt with this shortly and found that Frost & Sutcliffe had done enough to providethe necessary particulars of its defence in relation to causation, and that the ANZBank could prepare properly for trial. Thus, the ANZ Bank failed in that aspect ofthe application.Is the defence of contributory negligence plainly untenable?[20] Section 3(1) of the Contributory Negligence Act 1947 ("the Act") provides:3 Apportionment of liability in case of contributory negligence(1) Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the Court thinks just and equitable having regard to the claimant's share in the responsibility for the damage:Provided that—6 At [53].7 At [58].(a) This subsection shall not operate to defeat any defence arising under a contract;(b) Where any contract or enactment providing for the limitation of liability is applicable to the claim, the amount of damages recoverable by the claimant by virtue of this subsection shall not exceed the maximum limit so applicable.[21] "Fault" is defined in s 2:Fault means negligence, breach of statutory duty, or other act or omission which gives rise to a liability in tort or would, apart from this Act, give rise to the defence of contributory negligence.[22] To an extent the definition of "fault" is open ended. It is stated to meancertain things but is also asserted that it means anything which could give rise to thedefence of contributory negligence. The parameters of contributory negligence have,therefore, been established by case law. In Forsikringsaktieselskapet Vesta v Butcherthe English Court of Appeal affirming the decision of Hobhouse J8 held that, in acase concerning insurance brokers, the Law Reform (Contributory Negligence) Act1945 (UK), which the Contributory Negligence Act 1947 is modelled upon,9 applieswhen there is the same liability for negligence in tort and contract. The Act appliesin cases of concurrent sources of duty.10 The Forsikringsaktieselskapet Vesta vButcher case was applied by the Court of Appeal in Vining Realty Group Ltd vMoorhouse11 where the Court of Appeal held that the Act was not available becausethere had been a misrepresentation that amounted to a term of the contract under theContractual Remedies Act 1979, and which did not involve negligence.12[23] I agree with the Associate Judge that it is now well established that s 3(1) ofthe Act will not apply where the claim is for breach of a strict contractual duty.13 InBarclays Bank Plc v Fairclough Building Ltd the English Court of Appeal consideredthe point in relation to the English equivalent to the Act.14 It was observed by SimonBrown LJ:158 Forsikringsaktieselskapet Vesta v Butcher [1986] 2 All ER 488 (QB)9 Forsikringsaktieselskapet Vesta v Butcher [1989] AC 852 (CA).10 Mouat v Clark Boyce [1992] 2 NZLR 559 (CA) at 564–565.11 Vining Realty Group Ltd v Moorhouse (2010) 11 NZCPR 879 (CA).12 At [66].13 ANZ Bank NZ Ltd v Frost & Sutcliffe, above n 5, at [30].14 Barclays Bank Plc v Fairclough Building Ltd [1995] 1 All ER 289 (CA).15 At 306.The very imposition of a strict liability on the defendant is to my mindinconsistent with an apportionment of loss.In that case a building contractor who failed to comply with statutory regulationswas held to be in breach of a building contract, and that this was a breach of a strictcontractual duty.[24] There have been a number of English cases which have expressly dealt withthe issue of whether contributory negligence is available when there are allegationsof breaches of lenders instructions and required undertakings.16 These cases wereanalysed by the Associate Judge in his decision.17 I refer in particular to MidlandBank Plc v Cox McQueen.18 A customer of the defendant's solicitors had soughtfinance from the bank. The bank had instructed those solicitors to obtain signedsecurity documents and explain their implications. A solicitor's certificate wasrequired. In fact the signature of one of the clients was forged. The Court construedthe instructions as imposing a qualified rather than an absolute duty to obtain thesigned security. The Court commented on the "extremely limited value" orprecedent in this area where a document must be construed, and distinguished othercases observing:19Those cases are interesting illustrations of the approach of the Court to the construction of a solicitor's retainer, but the respective texts and contextwere significantly different from the relevant material in this case. Neither decision governs this case.It was noted:20If commercial institutions such as banks wish to impose an absolute liabilityon members of a profession they should do so in clear terms so that thesolicitors can appreciate the extent of their obligation which they areaccepting unless the language used in a retainer clearly has thisconsequence, the Court should not be ready to impose obligations onsolicitors which even the most careful solicitor may not be able to meet.16 Mortgage Express Ltd v Newman & Co [1996] PNLR 603 (Ch D); Barclays Bank Plc v Weeks Legg & Dean (a firm) [1999] QB 309 (CA); Zwebner v Mortgage Corporation Ltd [1998] PNLR 769 (CA); Midland Bank Plc v Cox McQueen (a firm) [1999] PNLR 593 (CA); and UCB Corporate Services Ltd v Clyde & Co [2000] Lloyd's Rep PN 653 (CA).17 ANZ Bank NZ Ltd v Frost & Sutcliffe, above n 5, at [34].18 Midland Bank Plc v Cox McQueen, above n 16.19 At 605.20 At 603.[25] The Court distinguished Zwebner v Mortgage Corporation Ltd.21 In that case the vendor required the solicitors to provide a standard form report as to titleincluding an undertaking that all appropriate documents would be executed on orbefore completion. Again a client had forged a signature, this time on the release ofmortgage. It was held that the undertaking was a clear and unqualified warranty thatthe mortgage deed had been properly executed, and that contributory negligence wasnot available. It was held that the vendor's solicitors would normally in any eventhave been liable on an implied warranty of authority if on completion they hadhanded over a transfer or conveyance with a forged signature.[26] Decisions based on English conveyancing practice must be treated withcaution. Nevertheless, the English approach is applied in New Zealand.22 Anycontract that can be construed as imposing strict liability should be given its naturalmeaning, and the Contributory Negligence Act should not be used as a means ofdefeating that contractual intention. The fact that a plaintiff with a strict contractclaim may have an alternative claim arising from the same events based onnegligence should not have the result of placing that plaintiff in a worse position.The point was graphically made by Simon Brown LJ in Barclays Bank Plc vFairclough Building Ltd:23The very imposition of a strict liability on the defendant is to my mindinconsistent with an apportionment of the loss. And not lease because of theabsurdities that the contrary approach carries in its wake. Assume adefendant, clearly liable under a strict contractual duty. Is his position to beimproved by demonstrating that besides breaching that duty he was inaddition negligent? Is this contract really to be construed so that thedefendant is advantaged by an assertion of its own liability in nuisance ortrespass as well as in contract? Are we to have trials at which the defendantcalls an expert to implicate him in tortuous liability, which the plaintiff'sexpert seeks paradoxically to exonerate him. The answer to all thesequestions is surely "No".[27] Mr Hunt in his submissions in support of the application did not seek tocontest the applicability of this line of English authority to New Zealand. Instead hesubmitted that the Courts will rarely find a professional retainer imposing a strict21 Zwebner v Mortgage Corporation Ltd, above n 16.22 Vining Realty Group Ltd v Moorhouse, above n 11; Mouat v Clark Boyce, above n 10.23 Barclays Bank Plc v Fairclough Building Ltd, above n 14, at 233.liability in cases involving professional duties arise. He referred to the statement of Lord Denning in Greaves & Co (Contractors) Ltd v Baynham Meikle & Partners:24Apply this to the employment of a professional man. The law does notusually imply a warranty that he will achieve the desired result, but only aterm that he will use reasonable care and skill. The surgeon does not warrantthat he will cure the patient. Nor does the solicitor warrant that he will winthe case.He submitted that the Associate Judge erred in his finding that Frost & Sutcliffe owed the ANZ Bank a strict obligation in respect of the release of the discharge.Mr Tingey on the other hand submitted that if it is a proper construction of theretainer that the liability was strict, that is sufficient and such a construction wasproperly applied by the Associate Judge.Contractual analysisThe letter of 2 March 2006[28] The two causes of action of the plaintiff are breach of undertaking and breachof contract. A third cause of action based on negligence will not be pursued. TheANZ Bank supports its claim relying on the following statements in its letter ofinstruction of 2 March 2006 (the letter) sending a discharge addressed to Frost &Sutcliffe which provided:Replacement Security – The above documents are forwarded to you on your undertaking that you will not release the documents and on the basis that the release/discharge documents is not effective, until our replacement security has been executed and your certificate for our security over the property at 1265 Alfriston Road, Alfriston, Auckland is available (refer to our letter dated 02/03/2006 for instructions).[29] It is significant that ANZ characterised the Frost & Sutcliffe obligation not torelease the documents until execution of the replacement security and provision ofthe certificate as "your undertaking". There was no specific reply to this letter.However, Frost & Sutcliffe proceeded to act on the ANZ Bank's instructions andmust be seen as having accepted its terms. It is common ground that in breach of thestipulations in the letter the discharge was released and the mortgage released,24 Greaves & Co (Contractors) Ltd v Baynham Meikle & Partners [1975] 1 WLR 1095 (CA) at 1100D.without the replacement security being executed or the solicitor's certificate madeavailable. However, it is denied by Frost & Sutcliffe that this was a breach of undertaking.[30] There was also a second standard letter of instruction provided by thedefendant on the same date. The actual letter could not be found but the partiesagreed on the form that the letter would have followed. That second letter alsoreferred to the fact that "replacement security has been given to the bank in return fora discharge of existing security" and that "you must not release the existing securityuntil the new security is signed and the bank has received your solicitor'scertificate".[31] Read objectively, the letter of 2 March 2006 placed a clear and absolutecontractual obligation on Frost & Sutcliffe, which it accepted in proceeding with thetransaction. It did not demur from either of the two strict requirements. Frost &Sutcliffe could not release the documents until the two stipulated events hadoccurred. The use of the word "undertaking" connoting as it does not onlycontractual but absolute professional obligations, makes the position very clear.25Under no circumstances whatsoever were the documents to be released unless theconditions were fulfilled. There was thus no leeway for professional judgment.Even a reason for releasing the documents that might have appealed to anexperienced and competent solicitor could not justify a departure. The securitycould not be released unless the conditions were met.[32] The wider factual matrix is relevant to this interpretation exercise. The ANZBank was providing a document that would have lethal commercial consequences tothe commercial viability of the transaction for them if it was misused. The situationwas akin to the provision of a blank cheque. Frost & Sutcliffe had a document thatthey could use, without further reference to the ANZ Bank, to destroy their security.Indeed this is what happened. The ANZ Bank had placed itself entirely in Frost &25 Rule 10.3 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 provides that "A lawyer must honour all undertakings, whether written or oral, that he or she gives to any person in the course of practice." I do not need to decide on whether or not thisamounted to a professionally binding undertaking.Sutcliffe's hands. In return they were imposing the strictest obligation on Frost &Sutcliffe.[33] Mr Hunt argued that the letter should be construed in accordance with thestandard instructions sent on the same day and that if this were done the contractualduty was not strict. However, the standard instructions were clearly apart from thestrict requirements set out in the letter of 2 March 2006. Those strict requirementsare distinguished by them being the only obligations referred to in that first letter.All the other obligations involving matters of professional judgment are dealt with inthe second letter and attachments.[34] Mr Hunt argued that the reference to the solicitor's certificate in the letter of2 March 2006 brought the notion of the prudent and competent solicitor into thecontract. I disagree. The terms of the solicitor's certificate stood apart from thespecific undertakings required in that letter. Thus the form of solicitor's certificaterefers to the bank providing "valid and enforceable securities". This is a differenttype of obligation to the strict obligation imposed in the first letter.[35] There were in the letter no subjective assessments to be evaluated againststandards of good practice and skill. The two requirements to obtain an executedreplacement security and prepare and hold a solicitor's certificate were in themselvesrelatively mechanical. They did not involve any issues of particular experience orcompetence. A secretary could obtain execution. The solicitor's certificate had to beavailable, but did not need to be accurate in its contents. It did not need to becorrect.[36] Given the importance of the task, and the straightforward nature of theprofessional obligation, it is unsurprising that the stipulations were expressed in theabsolute terms of undertakings. That is not to examine the issue from the point ofview of the breach of undertaking action, which is different from the contract claim,and which is contested as to liability. The significance of the word "undertaking" isin its contractual implication. The letter of 2 March 2006 was requiring Frost &Sutcliffe if it proceeded to provide the most strict contractual warranty as to how itwould act.[37] Undoubtedly if there had been an issue with the validity of any of the securities, the ANZ Bank would have been able to pursue Frost & Sutcliffe under thesolicitor's certificate, and Frost & Sutcliffe would have been able to raisecontributory negligence. In that area ANZ was seeking the comfort of Frost &Sutcliffe having carried out its professional obligations. This was a separate matterfrom the core issues dealt with in the letter of 2 March 2006.[38] Mr Hunt argued that a finding that contributory negligence was not availablewould mean that solicitors when faced with this sort of requirement would face greatdifficulties. They would have to make a judgment on whether a particular obligationis strict. However, given that the obligation is expressed in terms of an undertaking,a law firm would have no difficulty in understanding the nature of its obligation. Itwould be up to the law firm as to whether to accept or reject that strict obligation.Viewed objectively, Frost & Sutcliffe would have had no doubt about the nature ofthe obligation it was accepting if it accepted the ANZ Bank's retainer.[39] Mr Hunt submitted that the Associate Judge failed to give weight to contributory negligence cases where the Courts had found an analogous apportionment with the Contributory Negligence Act. I agree with Mr Tingey'sanalysis that the cases referred to by Mr Hunt were not cases dealing with breachesof strict contractual duties. Mr Hunt also relied on a statement in Mouat v ClarkBoyce of Cooke P that:26 apportionment in accordance with true responsibility will always beavailable and required by the justice of the case. It does not depend solelyon the Contributory Negligence Act, although the Act may be used byanalogy in developing case law in fields not covered by it.It has been observed by the learned authors of Burrows Finn & Todd The Law of Contract in New Zealand that "[t]here has been little further support for this view." 27This statement has not been interpreted in New Zealand as excluding or modifyingthe authorities indicating that contributory negligence can be excluded by strictcontractual obligations. Further, as the Associate Judge noted, in his earlier decisionin Day v Mead, Cooke P had qualified his position that there was an attraction in the26 Mouat v Clark Boyce, above n 10, at 566.27 Burrows Finn & Todd The Law of Contract in New Zealand (4th ed, LexisNexis, Wellington 2012) at [21.2.5].same duty of care arising in both tort and contract by saying that this was subject to any special contractual term.28[40] When I asked Mr Hunt what would be necessary to impose strict liability, hesubmitted that it would be words to the effect of "this is a strict obligation which isnot subject to standards of reasonable skill and care". In my view the words in theletter of 2 March 2006, referring as they did to undertaking to meet the tworequirements, had the same effect.[41] I conclude that this is a case where a contracting party has placed an explicit and strict obligation on a professional advisor to carry out particular tasks, and thatthis strict contractual obligation cannot be compromised by the ContributoryNegligence Act or any analogous apportionment. It follows therefore that I agreewith the Associate Judge's conclusion that contributory negligence is not available toFrost & Sutcliffe as a defence.[42] I also agree with his assessment that the striking out of this defence at thisstage will have practical implications. The standards of a competent bank inassessing lenders and making loans will not be at issue, as they would be if thepleading of contributory negligence was available.Request for particulars[43] The second aspect of the judgment under appeal that is challenged is theAssociate Judge's refusal to order particulars. Frost & Sutcliffe had raised lack ofcausation of loss as a defence to all of the ANZ Bank's causes of action. It stated:(1) ANZ would have suffered some loss due to a fall in the value of Alfriston Road as a result of the global economic crisis;(2) There would always have been a shortfall between:(a) The full amount 21st Century owed ANZ under the Loan Agreement; and(b) The proceeds of any recovery action against 21st Century and Mr Ha (which would have been nil, although legal costs would28 Day v Mead [1987] 2 NZLR 443 (CA) at 450.have been incurred) and the net proceeds of the sale of Alfriston Road after deduction of the costs and expenses of the sale.Mr Tingey for the ANZ Bank submits that this pleading does not inform it or the Court of the loss that Frost & Sutcliffe assert that the ANZ Bank would have suffered, even if it had received the mortgage over the Alfriston property.[44] It is necessary first to understand the statement of claim before thedefendant's response can be analysed. Here there is a problem as the figures in theANZ Bank's statement of claim are not transparent. It is said that the indebtednessset out in the ANZ Bank's proof of debt is $922,388.78. It is also asserted that theliquidators of Twenty-first Century Investments Ltd have declared void payments tothe ANZ Bank of $248,252.95. However, the amount claimed is $1,179,927.22.There is no obvious correlation between the amounts, and Mr Tingey was not able toexplain it to me in argument.[45] In that context it is unsurprising that the defendant's should challenge thequantum of loss in the statement of defence. To prove its loss the ANZ Bank willneed to show what it would have recovered should Frost & Sutcliffe had met itsobligations. It will be for it to prove that but for the Frost & Sutcliffe breach ofcontract it would have achieved a better recovery. It may be that this is notstraightforward given that this will turn on the amount that could have beenrecovered from the securities that should have been provided. The value of the landat the relevant time will be important.[46] Thus, Frost & Sutcliffe, in pleading as they do that while the ANZ Bank would have suffered some loss there would be a shortfall between the full amountthat Twenty-First Century Ltd owed and the potential proceeds of recovery from thesecurity that should have been executed, were doing no more than expressing thatwhich the ANZ Bank would have to prove in any event. To require Frost & Sutcliffeto particularise this pleading is to effectively ask them to set out for the ANZ Bankhow it will prove its claim. It is the ANZ Bank that carries the burden ofestablishing this loss, not Frost & Sutcliffe to show that no loss occurred.[47] Mr Tingey submits that the pleading was "fundamentally evasive, as it avoidssetting out what the loss and value was". However, this is a matter for the ANZBank to prove, not for Frost & Sutcliffe to disprove. Frost & Sutcliffe are not at thispoint relying on any specific loss or value. They are effectively putting the ANZBank to proof and giving it notice of where the area of dispute will lie. This is a fairuse of the pleading process.[48] Mr Tingey argues that Frost & Sutcliffe have not led any evidence that theyare unable to determine the value of Alfriston Road following the fall in propertyvalues. However, it is not up to Frost & Sutcliffe to provide evidence of the value ofAlfriston Road. The primary obligation to do this falls on the ANZ Bank, if it wishesto establish loss.[49] Thus, I accept Mr Hunt's submission that Frost & Sutcliffe have provided fairnotice of its defence in the statement of defence, but have no obligation to providefurther particulars. The evidence on which causation and loss turn will be adducedin the first instance by the ANZ Bank. It can be expected that the parties willunderstand each others position after the exchange of briefs. In the meantime, torequire Frost & Sutcliffe to give further details of a matter on which they are rightlyable to put the ANZ Bank to proof, would be to misuse the particulars procedure.The issue is adequately defined and that is all that is necessary. The ANZ Bank hassufficient material to adequately prepare their trial briefs.[50] For these reasons I agree with the Associate Judge's decision dismissing theapplication for further particulars.Costs before the Associate Judge[51] Mr Tingey also challenged the Associate Judge's refusal to make any orderfor costs. He submitted that the greater part of the argument related to the affirmative defence of contributory negligence and that therefore the ANZ Bank wasentitled to a significant order for costs to reflect that fact.[52] I agree that the Associate Judge's decision to let costs lie where they fall wasgenerous to Frost & Sutcliffe. However, it was the exercise of a discretion and I donot consider it to have been clearly in error or to meet the other requirements forappellate review of a discretion. Each side had succeeded in part. It is, however, abackground factor that the ANZ Bank's victory was the more time consuming toachieve that I will take into account in assessing costs in this hearing.Summary[53] In my view the Associate Judge was correct in rejecting both applications.[54] Thus, each of the applications for review brought by each party fail.[55] I see no reason to interfere with the costs order that was made.Costs in this hearing[56] By far the greater amount of argument before me concerned the contributorynegligence point. So, in my judgment, did the background research and thepreparation of submissions. The particulars issue was narrow in its compass, andwithout complexity.[57] Given that a generous order for costs was made by the Associate Judge in thehearing before him in favour of Frost & Sutcliffe, in this Court the fair result is toaward the costs of this hearing to the ANZ Bank who have succeeded on the primaryissue.[58] The defendant is to pay the plaintiff's costs of this review hearing on a 2Bbasis...Asher J