ANZ BANK NEW ZEALAND LIMITED v NGUY [2016] NZHC 2129

ANZ BANK NEW ZEALAND LIMITED v NGUY [2016] NZHC 2129 [8 September 2016]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2016-404-609[2016] NZHC 2129BETWEEN ANZ BANK NEW ZEALAND LIMITEDPlaintiffAND JESSE SEANG TY NGUYDefendantHearing: 16 August 2016Appearances: Mr K Crossland for PlaintiffMr M Taylor for DefendantJudgment: 8 September 2016JUDGMENT OF ASSOCIATE JUDGE J P DOOGUEThis judgment was delivered by me on08.09.16 at 3.30 pm, pursuant toRule 11.5 of the High Court Rules.Registrar/Deputy RegistrarIntroduction[1] The plaintiff, ANZ Bank New Zealand Ltd, has brought proceedings against the defendant, Mr Nguy, seeking judgment in the sum of $308,209.50 pursuant to an agreement concluded between the parties in June 2015. The plaintiff subsequently filed an application for summary judgment. The application is opposed by the defendant.Background[2] On 19 July 2011 the plaintiff entered into a Multi-Entity Facility Agreement("Original Facility Agreement") with the defendant as trustee of the Schwarz WaldTrust ("Trust").[3] On the same day, as part of the security required for the Original Facility Agreement, the defendant signed a guarantee and indemnity of all obligations of theTrust, unlimited as to amount ("Guarantee"). The other security to the Original Facility Agreement was a registered first mortgage over Lot 3, Boiler Gully Road, Awhitu.[4] On 5 October 2011, the plaintiff signed a second Multi-Entity FacilityAgreement ("Trust Loan Facility") with the defendant as trustee of the Trust. This replaced the Original Facility Agreement. The securities to the Trust Loan Facility included the previous securities provided and an additional two registered first-ranking mortgages ("mortgaged properties").[5] The Trust Loan Facility contained the following provisions:Each Surety acknowledges that it has received a copy of the General Conditions. Accordingly, each Surety undertakes to the Bank to punctuallycomply with all the obligations imposed on it as "Surety" under the General Conditions and under each Security to which it is a party.Trusts as suretyJesse Seang Ty Mr Nguy as Trustee (the "Surety Trustee") of Trust (the"Surety Trust") certifies that this acknowledgement has been confirmed,approved and ratified by the Surety Trustee[s] to the extent required by theconstituent documents of the Surety Trust or any other applicable document or law.Jesse Seang Ty Mr Nguy ("Limited Liability Surety Trustee") provides this acknowledgement as an independent trustee of the Surety Trust and his/her liability as Surety in relation to the Transaction Documents is limitedto the assets of the Surety Trust.[6] The plaintiff accepts that once the assets of the Trust had been sold, as I note below, the defendant had no further liability to it under the "surety trustee"provisions set out above. However, the plaintiff contends that the defendant continued to be personally liable for the borrowings of the Trust under the Guarantee which he entered into on 19 July 2011.[7] On 22 August 2012, the plaintiff entered into a Sole Trading Facility with thedefendant for his legal practice, Jesse & Associates ("Sole Trading Facility"). Thiswas a separate transaction to his existing borrowing for the Trust. The plaintiff'ssecurity for this facility was a General Security Agreement ("GSA") over all present and after acquired property of "Jesse Nguy trading as Jesse & Associates". Theplaintiff did not take a separate guarantee from the defendant under the Sole Trading Facility. I assume however that the defendant was personally liable under the covenants contained in the Sole Trading Facility. The Sole Trading Facility is not directly the subject of these proceedings, any liability on the part of the defendant under it having been settled. It is however a relevant strand to the background of the overall issues that have arisen on this summary judgment application.[8] Between late October 2013 and early February 2014, the plaintiff had discussions with the defendant over both the Trust Loan Facility and the Sole Trading Facility. This included allowing time for the defendant to obtain refinance from another lender.[9] On 4 February 2014 the plaintiff, by email, informed the defendant that it wished to end their relationship. The plaintiff asked the defendant to repay the Sole Trading Facility by the end of February 2014 and said that it would commence legal action against the Trust in relation to the Trust Loan Facility.[10] On 3 March 2014 the plaintiff, by letter, demanded repayment of the Sole Trading Facility by 28 March 2014.[11] On 25 March 2014 the plaintiff's representative, Mr Lal, met with thedefendant and a third party, Mr Kelly. The purpose of the meeting was to discuss the Trust Loan Facility. During that meeting, the defendant says, he stated his position that his liability under the Guarantee was limited to the same extent as the"surety trustee" liability; that is, that the defendant's liability was limited to theassets of the Trust. The plaintiff disputes that the defendant made such a statement.[12] The next day, on 26 March 2014, Mr Lal met with the defendant to discuss his Sole Trading Facility. During that meeting the defendant agreed to repay his Sole Trading Facility by instalments. In fact, by 2 July 2014 Mr Nguy had repaid the Sole Trading Facility in full.[13] On 2 May 2014, as part of the plaintiff's enforcement action, it served onthe defendant a letter of demand in his capacity as guarantor of the trust liability. The letter of demand specified that the plaintiff might commence action against the defendant in his personal capacity if there was a shortfall on the sale of the mortgaged properties.[14] On 8 December 2014, following negotiations with several potential purchasers, the plaintiff accepted a third party's offer to buy the mortgagedproperties for $405,000 plus GST.[15] On 19 January 2015 the defendant resigned as trustee of the Trust. It is not disputed that such resignation did not bring to an end any liability that the defendant might have had either as trustee or guarantor. On the resignation of the defendant,Britomart Trustee Company Limited, which held power of appointment, appointed Boiler Gully Forest Investments Limited ("Boiler") as the Trust's new trustee. Mr Kelly is a director of both Britomart and Boiler.[16] On 22 June 2015, the plaintiff entered into a deed of the settlement ("Deed")with the defendant along with Boiler and Mr Kelly (together, the obligors). As partof the Deed, the obligors also signed an admission of claim acknowledgement. The defendant confirmed in writing to the plaintiff that he had received independent legal advice before signing the Deed.[17] The obligors then paid the plaintiff four instalments of $5,000 each under the Deed.[18] In November 2015 the obligors, including the defendant, defaulted on the Deed by missing a $25,000 instalment due on 22 November 2015.[19] On 24 March 2016 the plaintiff commenced proceedings against the defendant.Summary judgment principles[20] There was no dispute as to the principles that are applicable to a summary judgment application such as that before the court. Mr Taylor for the defendant submitted that the following approach was to be adopted.5 It is submitted that the test is a settled one. The onus of proof is on the plaintiff to satisfy the Court that Mr Nguy has no defence to the claim.6 In Pemberton v Chappell [[1987] 1 NZLR 1 (CA) at 3-4] Somers J said: in this context the words "no defence" have reference to theabsence of any real question to be tried. That notion has been expressed in a variety of ways, as for example, no bona fide defence,no reasonable ground of defence, no fairly arguable defence Onthis the plaintiff is to satisfy the Court; he has the persuasive burden. Satisfaction here indicates that the Court is confident, sure, convinced, is persuaded to the point of belief, is left without any real doubt or uncertainty.[]Where the defence raises questions of fact upon which the outcome of a case may turn it will not often be right to enter summary judgment. There may however be cases in which the court can be confident – that is to say, satisfied – that the defendants' statementsas to matters of fact are baseless. The need to scrutinise affidavits, to see that they pass the threshold of credibility, is referred to in Eng Mee Yong v Letchumanan [1980] AC 331, 341 and in the judgment of Greig J in Attorney-General v Rakiura Holdings Ltd (Wellington, CP 23/86, 8 April 1986).7 In Krukziener v Hanover Finance Ltd [[2008] NZCA 187, [2010] NZAR 307 (CA) at [26]] the principles on which summary judgment can be granted were stated by the Court as follows: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 p3; p 185. The Court must be left without any real doubt and 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 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 Me Yong v Letchumanan [1980] AC 331; [1979] 3 WLR 373 (PC) at 341; p381. In the end the Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it; Bilbie Dymock Corp Ltd v Patel(1987) 1 PRNZ 84 (CA).Liability under the Trust Loan Facility and Guarantee[21] The plaintiff is suing under the Deed. The defendant contends that, in order to determine whether he is liable under the Deed, it is relevant to determine theextent of his liability under the Trust Loan Facility and Guarantee ("original lendingarrangements"); namely, whether he was personally liable for the Trust borrowings,or whether as a trustee, his liability was restricted to the extent of the Trust assets. Ifthere was no liability under the original lending arrangements, the defendant's consequent contention is that he ought not to be liable under the Deed.[22] It would seem to be implicit in the defendant's argument that, if hissubmission as to the limited extent of his liability under the original lending arrangements is correct, then there was no liability which could become the valid subject matter of the subsequent Deed. Analysis of the linkage between the original lending arrangements and the Deed rather trailed off at this point and I did not have the benefit of any additional analysis of how that position would come about.[23] This point raises the question of whether it is arguable that the defendant was not liable under the Guarantee. In the course of argument, I asked Mr Taylor to identify the basis upon which the defendant might argue that his liability under theGuarantee was linked to the value of the assets of the Trust. Mr Taylor candidly accepted that it came down to the fact that it had always been the understanding and the belief of the defendant that such was indeed the correct position.[24] This is not a case therefore where the defendant has sought to establish by construction of the wording and other aspects of the Deed, that the objective meaning of the contract was that his liability under the Guarantee was limited to the value of the Trust assets. Instead, the subjective views of the defendant are put forward. The legal position is that which Tipping J stated in his judgment in the Supreme Court decision of Vector Gas Limited v Bay Of Plenty Energy Limited to the following effect:1[19] The ultimate objective in a contract interpretation dispute is to establish the meaning the parties intended their words to bear. In order to be admissible, extrinsic evidence must be relevant to that question. The language used by the parties, appropriately interpreted, is the only source of their intended meaning. As a matter of policy, our law has always required interpretation issues to be addressed on an objective basis. The necessary inquiry therefore concerns what a reasonable and properly informed third party would consider the parties intended the words of their contract to mean. The court embodies that person. To be properly informed the court must be aware of the commercial or other context in which the contract was made and of all the facts and circumstances known to and likely to be operating on the parties' minds. Evidence is not relevant if it does no more than tend to prove what individual parties subjectively intended or understood their words to mean, or what their negotiating stance was at any particular time.[25] The subjective understanding or belief of the defendant therefore isirrelevant. No other basis is put forward upon which the defendant's construction ofthe Trust Loan Facility and Guarantee should be viewed as the preferred interpretation of those documents. The personal guarantee was unlimited and it ought to be given effect to in my view. An argument to the effect that the defendant was not liable under the original lending arrangements and that therefore the Deed was oppressive cannot be supported on this ground.[26] But as it turns out, I do not consider that it is necessary for the court to determine the issue of whether the defendant was in fact liable under the original1 Vector Gas Limited v Bay of Plenty Energy Limited [2010] NZSC 5, [2010] 2 NZLR 444 at [19] (footnotes omitted).lending arrangements. That is because the Deed upon which the plaintiff sues contained an express acknowledgement on the part of the defendant that he was liable and express reference was made in the Deed to the fact that that liability arose out of the Guarantee dated 19 July 2011.[27] The acknowledgement contained in the Deed means that the defendant is estopped from denying his admission of liability. The position is stated in Laws of New Zealand in the following terms:263. General. At common law, estoppel by deed is a rule of evidence founded on the principle that a solemn and unambiguous statement or engagement in a deed must be taken as being binding between parties and privies and therefore as not admitting any contrary proof. An exception arises when the deed is fraudulent or illegal. The general position is different in equity and, as equity prevails, the common law rule is modified in that when there are proper grounds for rectification, for example where the deed was based on a common mistake of fact, there can be no estoppel based on the original form of the instrument.[28] None of the exceptions which are stated in the extract from the Laws of New Zealand would appear to be relevant. It does not, for instance, appear to be reasonably arguable that the Deed ought to be rectified because it does not reflect a common understanding of the parties that the defendant was not liable.[29] The issue of cancellation of the contract pursuant to the provisions of theContractual Remedies Act 1979 ("CRA") is not discussed in the passage to which Ihave made reference. In theory, the defendant might be able to seek cancellation of the Deed on the basis that his entry into the agreement had been induced by a misrepresentation on the part of the plaintiff. I shall return to that topic shortly.[30] Another possible ground for the cancellation of contracts generally would be a lack of consideration. However, the agreement of 22 June 2015 requiring the obligors to repay the sum of $337,476.79 plus interest was executed as a deed and therefore any issues concerning absence of consideration do not apply.2 Laws of New Zealand Estoppel at [63].Misrepresentation inducing entry into the deed[31] The arguments that have been considered to this point assume the validity of the Deed. However, it has to be acknowledged that if the Deed is able to be set aside, then it would be necessary to revert to the anterior question of whether there was such a liability under the original lending arrangements.[32] One of the grounds set out in the notice of opposition is that:d. The defendant entered into the Settlement Deed based on representations made by the plaintiff as to his liability as a trustee of The Trust[.][33] No particulars are put forward regarding the content of the relevant representations. However, based upon the affidavit which the defendant has filed in the proceedings, it would appear that the alleged misrepresentation consisted of the plaintiff telling the defendant that he had unlimited personal liability under the original lending arrangements because he had signed the Guarantee. Such a misrepresentation was, in the view of the defendant, material and but for that representation, he says, he would not have entered into the Deed.[34] I understand that the substance of the defendant's misrepresentation pointcentres on the terms of an email which the plaintiff sent to him on 19 July 2011. That email was part of a series of exchanges between the plaintiff and the defendantregarding the terms of the defendant's engagement as the debtor under the OriginalFacility Agreement. The defendant was the trustee and would in effect be the borrower. There was also discussion about the associated personal guarantee which the plaintiff expected the defendant to provide. When the first drafts of those documents were provided to the defendant, he returned them to the plaintiff having inserted into the documents, in handwriting, provisions which purported to limit his liability both under the Original Facility Agreement and under the Guarantee so that it would not exceed the value of the Trust assets. The plaintiff in its final email prior to execution of the documents agreed to amendment of the Original Facility Agreement by insertion of the limitation provision which the defendant sought. That email stated:Here is the revised [Original Facility Agreement] and guarantee attached. You will see the limited liability clause is in both the surety acknowledgement and in the General and Specific conditions schedule.The guarantee will not need the limited liability clause attached.So sorry about the hassle.[35] What the plaintiff appears to be saying in that email is that the OriginalFacility Agreement would contain a limitation of the defendant's liability to thevalue of the Trust assets but that a similar limitation provision would not be required in the case of the Guarantee – in other words, that the plaintiff was not going to agree to any limitation of the liability under the Guarantee. In any case, the statement was made in a email which accompanied a document setting out the actual form of the Guarantee. That Guarantee omitted any limitation of liability.[36] Regardless of the regrettable lack of clarity in the plaintiff's email, it wouldhave been obvious to the defendant that the Guarantee that he was being asked to sign did not contain the additional limitation of liability wording which he had handwritten onto the original draft.[37] The position which the plaintiff takes concerning this matter is that:a) the supposed representation, being one concerning the legal effect of the Guarantee, is concerned with questions of law rather than fact and therefore does not qualify as a misrepresentation which the defendant is entitled to rely upon as a basis for cancelling the agreement set out in the Deed;b) the position which the plaintiff took in the Deed negotiations, which was that the defendant had unlimited personal liability in terms of the Guarantee which he had given, was correct and therefore there was no misrepresentation;c) the defendant did not genuinely believe that his liability under the Guarantee was limited to the value of the Trust assets, having expressed himself to the contrary in statements that he made at thetime. He was not therefore induced to enter into the Deed as a result of any misrepresentation on the part of the plaintiff.[38] In making his submissions on this issue, counsel for the plaintiff referred to the authorities reviewed in Burrows, Finn and Todd Law of Contract in New Zealand.3 Those authorities included judgment of the High Court in Shotover Loan Mining Ltd v Brownlie where it was affirmed that the concepts of representation and misrepresentation as used in the CRA were derived from their common law meanings.4 That being so, misrepresentations, at least in the context of what thecourt referred to as "the rescission context" are limited to representations of fact as opposed to those of opinion.[39] The statement of a view by a party to a commercial dealing that the parties'legal arrangements have a particular legal effect can only be a statement of opinion and not fact. On these grounds alone, I would conclude that it is not reasonably arguable that the defendant might have grounds to cancel the Deed on the basis of the plaintiffs alleged misrepresentation.[40] But there are also other objections to the supposed ground of defence. Nowhere does the defendant assert how it came about that, as an experienced lawyer, he actually relied upon a supposed misrepresentation about the meaning of a document, let alone one which emanated from the very party which was putting that document forward. In the absence of some explanation as to that state of affairs, common sense requires the court to reject the suggestion that the defendant was influenced to enter into the Deed as a result of a misunderstanding as to its legal effect.[41] Nor would it appear arguable that a representation made in an email in 2011, when the original lending arrangements were concluded, was still operative on mind of the defendant when he entered into the Deed three years later in June 2014. Unless that was the position, the representation could not be called in aid to set aside the Deed.3 Burrows, Finn and Todd Law of Contract in New Zealand. (5th ed, Lexis Nexis, Wellington, 2016) at [11.2.1(d)].4 Shotover Loan Mining Ltd v Brownlie HC Invercargill CP96/86, 30 September 1987 at 105.[42] However, the second affidavit which the defendant has filed suggests that the representation which induced him to enter into the Deed emanated from a separate source, namely the solicitors acting for the plaintiff. The defendant deposed:10. On 2 May 2014 I received a letter from Shieff Angland which stated that the bank will take action against me as a Guarantor in my personal capacity to recover the debt owing to ANZ. Annexed andmarked with "I" is a copy of the letter.11. On 13 March 2015 I received another letter from Shieff Anglandwhich stated that I was personally liable. Annexed and marked "J"is a copy of the letter.12. On 22 April 2015 I again received a letter from Shieff Angland which suggested that I was personally liable under the guarantee. I did not believe that this was the case, but at the time I did not have my files available as it had been uplifted by Mr Kelly. Annexed andmarked "K" is a copy of the letter.13. I believe that the letter from Shieff Angland was a misrepresentation of my liability in my capacity as guarantor.14. On twenty-third of April 2015 I responded, and confirmed that the debt was not owed by me personally, but it was a debt of the trust. Annexed and marked "L" is a copy of that email.15. Notwithstanding, the letter from Shieff Angland asserting that I was personally liable influenced my decision to sign the Deed of Settlement with the Bank. At the time I was incredibly stressed and was worried about my legal practice At the time, I was notthinking straight and was confused about what my liability was under each of the loans.[43] It is to be assumed that the above passages represent the substance of any evidence that the defendant would give were this matter to proceed to trial. The basis upon which the defendant puts forward the supposed misrepresentation and the effect that it allegedly had on him would be unlikely to be accepted by the court as establishing a defence in the form of an entitlement to set aside the Deed. Insubstance, the defendant's evidence is that the letter from Sheiff Angland wronglyattributed personal liability for the Trusts debts under both the Trust Loan Facility and the Guarantee to the defendant. However, notwithstanding that Shieff Angland expressed this view, he wrote back to them denying that he was liable. He does not say that anything in the letter from Shieff Angland caused him to reflect further on his legal position and come to the opposite conclusion so that he thereafter regarded himself as having personal liability. And yet he went ahead and signed the Deed,which compromised the amount that he would have to pay on the assumption that he was personally liable for the whole of the debt. Whatever his reason for signing the Deed was, it was not because he had revised his opinion that he was not personally liable. The Shieff Angland letter did not therefore induce him to enter into the Deed.[44] The conclusion just stated is enough to rule out an arguable defence based upon misrepresentation inducing the defendant to execute the Deed. Additionally, though, the supposed misrepresentation defence would fail on the grounds reviewed in [38] above to the effect that a misrepresentation as to opinion, as opposed to a matter of fact, will not suffice for the purposes of the CRA.[45] The result must be that as part of its application for summary judgment in this case, the plaintiff is able to demonstrate that there is no arguable defence which would consist in, amongst other things, the defendant being able to assert that he is not bound by the Deed. If he is bound by the Deed, he is estopped from denying that he has the liability which is the basis of the claim that the plaintiff brings against him.[46] As a result of this conclusion it is not necessary to consider other difficulties that stand in the way of the successful invocation of the defence of misrepresentation by the defendant. These include the problem that before he entered into the Deed he obtained legal advice concerning his liability as guarantor. Given that the Deed wasconcerned with compromising the defendant's liability under the Guarantee, it isinconceivable that legal advice would not have been sought and given concerning the enforceability of the Guarantee. If the advice that he received was that he was not personally liable for the Trust debt, it is incomprehensible why he would have acted on the views of the lawyer acting for his opponent, the plaintiff, in preferenceto his own lawyer's views on the same subject. Given the centrality of the issueregarding the defendant's belief about his liability under Guarantee before he signedthe Deed, his failure to disclose what advice he received from his own lawyer must be regarded with suspicion; namely, that it has not been disclosed because it does not assist or is adverse to the present defence which he is mounting.[47] In summary, I do not consider that the defendant has an arguable defence that the Deed entered into in June 2014 is likely to be set aside on the basis of misrepresentation on the part of the plaintiff.Credit Contracts and Consumer Finance Act 2003[48] The next issue concerns the third defence which the defendant puts forward: that the Deed contained arrangements which were subject to the Credit Contracts andConsumer Finance Act 2003 ("CCCFA"); that the arrangements were oppressivewithin the meaning of s 120(c) of the CCCFA; and that it is arguable that the defendant may be able to persuade the court to reopen those arrangements.[49] The notice of opposition set forward the basis for the assertion that the Deed was oppressive are as follows:(a) The Settlement Deed dated 16 June 2015 upon which the Plaintiff relies is a credit contract pursuant to the Credit Contracts and Consumer Finance Act 2003;(b) The credit contract is oppressive in one or more of the following ways:(i) The Defendant's liability under the Facility Agreement dated7 July 2011 and Deed of Guarantee dated 14 July 2011 was as a trustee of the Schwartz Wald Trust (Trust) and limited to the value of assets of the Trust comprised of the properties secured by mortgage;(ii) The credit contract was entered into after the Defendant had resigned as a trustee of the Trust on 19 January 2015;(iii) The Plaintiff was put under duress and advised the Defendant that he was required to either accept the terms ofthe "settlement" or he would be sued;(iv) The properties secured by way of mortgage were sold by the Plaintiff at a public auction at undervalue;(v) The properties had trees which were able to be sold off as a separate valuable asset, and which the Plaintiff failed and/or neglected to do;(vi) The Plaintiff through its representative at the auction prevented bidders, more particularly Mr Stephen Kelly, from being permitted to bid at the public auction;(vii) The Plaintiff has failed to recoup the GST on the transaction;(viii) The Plaintiff has refused to disclose the valuation received for the property[.][50] Mr Taylor submitted that s 118 of the CCCFA defines oppressive as"oppressive, harsh, unjustly burdensome, unconscionable, or in breach of reasonable standards of commercial practice".[51] Further, he said that the approach by the courts when considering oppression is a case by case analysis, with no single principle underlying the various elements ofthe definition of 'oppression'.5[52] Mr Taylor drew my attention to the well-known dictum in Italia Holdings (Properties) Ltd v Lonsdale Holdings (Auckland) Ltd where Vautier J said:6The word "oppressive'" clearly connotes that some real detriment orhardship is involved. The word "harsh" is indicative of something of the same nature. The phrase "unjustly burdensome" clearly shows ... that the factthat the performance of the contract is difficult for the party applying is insufficient. Injustice must be shown to exist as well... [T]here are numerous decisions showing that that word [unconscionable] was interpreted as requiring something more than an inquiry into whether a contract was fair or unfair to one party or the other. The final phrase, "in contravention of reasonable standards of commercial practice" is admittedly a wide ranging concept It surely requires something more than a simply uninformedconclusion as to what is fair or unfair from the standpoint of commercial dealings.[53] It was counsel's further submission that in the circumstances of this case anenquiry is required into the conduct of the plaintiff to assess and determine whether that conduct amounts to oppressive conduct and/or a breach of standards of reasonable commercial practice. It is at least arguable in these circumstances that the plaintiff, through its conduct, pressured the defendant to the point where he felt that he had no option but to enter the Deed. If that is the case, given that the defendant denies any personal liability under the original lending arrangements, it is arguable that the plaintiff breached reasonable standards of commercial practice.[54] Mr Taylor further submitted that on any claim under the CCCFA the court will need to consider the circumstances of this case, including:5 See Bartle v GE Custodians Ltd [2010] NZCA 174, [2010] 3 NZLR 601.6 Italia Holdings (Properties) Ltd v Lonsdale Holdings (Auckland) Ltd [1984] 2 NZLR 1 (HC) at 16.a) The defendant as a professional trustee had no personal liability under the original lending arrangements (and/or had at least understood that to be the position by virtue of his correspondence with the plaintiff at the time the loan was made);b) Subsequent to default, the plaintiff in its dealings with the defendant insisted that he was personally liable;c) The Deed was signed by the defendant in his personal capacity, so he went from a position whereby his liability was limited to having personal liability which is out of ordinary for a professional trustee;d) The defendant was concerned that failing to sign the Deed would result in a claim against him and/or his firm which would be disastrous for his legal practice;e) The plaintiff had previously called up the defendant's businessoverdraft facility and advised that receivers would be appointed to his firm, which had caused stress and anxiety for the defendant;f There were outstanding issues surrounding the sale of the mortgaged properties at the mortgagee sale which remained unresolved and had not been properly addressed by the plaintiff, including sale at an undervalue, issues around GST treatment, and failure to realise the value of the trees on the property.[55] The position of the plaintiff is that:a) The deed compromised a pre-existing liability which the defendant owed to the plaintiff under the original lending arrangements and about which there could be no substantial dispute;b) Even assuming that the Act applies to deeds such as the present kind which are not concerned with making loans but which in this case wasconcerned with compromising an existing debt, the grounds upon which the defendant relies are unsustainable because:i) the defendant did as a matter of law have an unlimited personal liability to the plaintiff which it was the purpose of the Deed to compromise;ii) the defendant had settled any issues with the plaintiff concerning the indebtedness of his practice well in advance of the date when he entered into the Deed and therefore the claimed apprehensions of undue pressure that might arise as a result of the defendant having granted a GSA over the practice could not have been operative at the time when the Deed was entered into;c) There was no sale at undervalue. The plaintiff accepted the highest offer for the property that was supported by a deposit which was forthcoming. It acted in accordance with advice of the valuer and also of professional real estate agents in managing the sale process.d) There was no obligation on the part of the plaintiff to sell the trees that were growing on the mortgaged properties separately and in any event the price which was offered for the properties reflected the value of the trees.e) GST was properly payable as was confirmed by the Commissioner of Inland Revenue and by the defendant himself who confirmed that that was the position.f) The entry into the Deed could not therefore be attacked as having resulted from oppressive conduct on the part of the plaintiff and therefore it was not reasonably arguable that the court would reopen and enquire into liability under the Deed.Discussion[56] I will now consider some but not all of the points that were urged on behalf of the defendant in establishing that the transaction ought to be reopened under the CCCFA.[57] This case raised a potential preliminary point which was whether a Deed of the kind which the parties entered into in this case is covered by the CCCFA. However, while noting the point, Mr Crossland did not place argument before the court which would support the contention that the arrangements were outside the scope of the CCCFA. No further consideration of the point is therefore required.[58] As a commencing observation, I consider that when properly applied in the way which is described in Italia, the remedy provided by the CCCFA will not be forthcoming for the reason only that the plaintiff may have conducted itself in a way that gives rise to legal rights against it. For example it is not enough to simply assert that because the defendant is able to show some grounds for supporting the view that the plaintiff may have misrepresented an aspect of the transaction between the parties, then an arguable case exists for reopening the transaction. It has been necessary to note this point because much of the argument put forward on behalf of the defendant in this case seems to depend upon such a process of reasoning.[59] The correct approach has been explained in the Court of Appeal judgment of Hammond J in Bartle v GE Custodians Ltd in the following terms:7[51] Oppression in the CCCF Act is a generic remedy. The statutory definition in s 118 is deliberately broad. It extends that term to something that is oppressive, harsh, unjustly burdensome, unconscionable, or in breach of reasonable standards of commercial practice. There is a tendency - apparent in this case, as in the decided cases - to "extract" one of thosestatutory terms and fasten upon it, often by reference to the way that term has been developed by common law or other legislation. However, it cannot be stressed too strongly that oppression is a stand-alone, generic and statutory remedy. In my view, it should not be given a pinched or unduly restrictive meaning, because s 118 of the CCCF Act clearly indicates that Parliament intended the provision to have a wide ambit of application.7 Bartle v GE Custodians Ltd, above n 5, at [51].[60] The correct approach would seem to be for the court to enquire into the question of whether there are aspects of the way in which the plaintiff has dealt with the defendant which can be described as harsh, oppressive or unconscionable. When the evidence before the court is examined from that perspective, I do not consider that it can reasonably be concluded that the transaction is one that arguably ought to be reopened.[61] In the first place, I do not consider the fact that the defendant's interest in thetransaction was only as a professional adviser he allowed himself to be nominated as trustee and thereafter took it upon himself to give a personal guarantee is a matter that establishes that the transaction was oppressive. The requirement of a trustee being the covenantor on a facility agreement of this kind is common and everyday in its occurrence. The fact that the defendant allowed himself to be persuaded to give a personal guarantee is regrettable but speaks of an error of judgment on his part rather than any undue pressure on the part of the plaintiff. It was always open to the defendant to obtain independent legal advice regarding the effect of the Guarantee and, if he was not prepared to live with the consequences of signing such a guarantee, for him to decline to do so. The fact that the transaction might not have proceeded in those circumstances would have been the concern of the client and not the defendant. I appreciate that it is contended on behalf of the defendant that he was under pressure with the plaintiff at this time but I do not consider that that converts the transaction into one which was oppressive for reasons I will set out shortly. In summary, I consider that the plaintiff was obviously looking after its own interests in seeking a personal guarantee from the solicitor for liabilities whichrightly belonged to the solicitor's client. While there is no evidence on that point, Iwould surmise that most wise practitioners would have declined to provide a personal guarantee in these circumstances. I repeat, the defendant did not need to accede to the request.[62] At the same time, based upon the little that is known of the circumstances leading up to the decision to lend, the plaintiff as a banker may well have had good reasons to ensure that it had security additional to the mortgaged properties, for the purchase of which the advances were made in the first place. It may be routine for mortgage lending on straightforward cases such as residential purchases to besecured only by the covenant of the borrowers and security over the purchased property. In this case, had it not been for the Guarantee, the plaintiff would not have had even that level of security. That is because in terms of the Original Facility Agreement and the subsequent Trust Loan Facility, there was no personal covenant which it could rely on to recover any deficiency should the assets purchased prove to be worth less than expected.[63] The only other possible aspect of the lending transaction which might amount to oppressive conduct was the alleged failure on the part of the plaintiff to disclose the true nature of the transaction to the borrower. However, these contentions do not withstand scrutiny. The defendant as a solicitor returned two draft proposed lending documents (that is the Original Facility Agreement and the Guarantee) to the plaintiff with proposed amendments of a significant kind. The proposal that he made would mean that, in effect, the only security that the plaintiff would have would be over the mortgaged properties. It is easy to understand why the defendant might have wanted to achieve such an outcome. However, the plaintiff refused to accede to such an approach. As a matter of first principles, the defendant would haveunderstood that the plaintiff's refusal to limit his liability under the Guarantee to thevalue of the Trust assets meant that he was going to be exposed to an indeterminate liability in the event that the transaction went wrong. Given the profession to which he belongs, it is unthinkable that the defendant did not understand that his proposal to amend the effect of the borrowing documents was being rejected and that the plaintiff was only prepared to proceed on the basis that the defendant would have an unlimited personal liability under the Guarantee. I consider that it is unlikely that the court at trial would conclude that there was a real issue to be tried in this area, or that a substantial question existed whether the defendant really misunderstood the effect of the arrangements and, therefore, whether the plaintiff took advantage of an apparent misunderstanding on his part.[64] Point (d) mentioned in [54] does not, either on its own or cumulatively with other points, establish oppressiveness either. It is correct that the defendant funded his practice from advances made to him by the plaintiff. The defendant deposes that:7. At the time my practice had its accounts and an overdraft with ASB. During the discussions with [the plaintiff] about the trustborrowings, I was offered a business overdraft with [the plaintiff] of $150,000 on the basis that I transferred all my business to [the plaintiff]. I considered this a good offer and accepted. The overdraft was provided to the bank, (sic) which I personally guaranteed, and I also gave a General Security of my firm. This was in around July/August 2012.9. On 3 March 2014 I received a formal letter from [the plaintiff] calling in the overdraft. This was around the time that the trust was defaulting on loan repayments. While I accept the bank was entitled to call up the loan, this put a significant amount of stress on me. Mr Dikish Lal was advising me that if I did not repay my business overdraft a receiver would be appointed to take over my firm. With both loans being called up, I was stressed and confused between the loans.[65] However the Deed in the present matter was entered into in June 2015, approximately one year and three months after the date when the practice loan was called up. The practice overdraft matter was resolved by an agreement being entered into in March 2014 whereby the plaintiff agreed that the defendant could repay the debt by instalments. The evidence is that this disposed of the practice overdraft question because the defendant actually adhered to the arrangements that were entered into. There is therefore no basis for concluding that as at June 2015 the defendant was under any pressure from this source.[66] A further point to be noted is the defendant's contention that he has asubstantial defence of oppressiveness based upon the ground that the Deed was entered into after the defendant had resigned as trustee. The point was not supported at all in argument and I do not regard it as having merit. The Deed was concerned with adjusting the rights of parties under pre-existing causes of action, specifically, the right of the plaintiff to pursue the defendant for the entirety of its loss in reliance upon the provisions of the personal guarantee. The parties agreed that the plaintiff would in fact settle for a reduced sum payable by instalments. The validity of such a transaction did not self-evidently depend upon the parties still occupying the same position as that they did when their respective rights and liabilities came into existence.[67] The final point that is raised concerns what counsel for the defendantdescribed as "outstanding issues surrounding the sale of the properties at themortgagee sale Including sale at an undervalue". I shall deal with this aspect ofthe matter in the next section of this judgment.Sale of the mortgaged properties at undervalue[68] Part of the submissions which counsel for the defendant made were as follows:22 There [were] a number of issues that Mr Nguy and Mr Kelly had with the process that the plaintiff adopted in selling the properties at mortgagee sale. These were:a The properties were sold at an undervalue;b On the Pre-Auction Marketing Report, Barfoot and Thompson suggested a sale price is likely to be between $600,000 and $800,000;c On 26 November 2014 the mortgagee sale commenced by way of auction. The properties were passed in at auction on a bid of $470,000;d The properties had trees which were able to be sold off as a separate valuable asset which the plaintiff failed and/or neglected to do. The property was ultimately sold for $405,000 plus GST. The valuation of the forestry is set out in a Valuation by Fergusson Lockwood & Associates dated 10 November 2014 and shows the value to be assessed at $90,000 (exclusive of GST if any);e The plaintiff prevented bidders (more particularly Stephen Kelly), from being permitted to bid at public auction;f The plaintiff has failed to recoup the GST on the transaction;g The plaintiff has refused to disclose a Valuation received for the property.23 On 8 December 2014, the plaintiff accepted an offer from a third party for the purchase of the three properties. As a result of the purchase price of $405,000 (plus GST), there was a shortfall owing to the plaintiff.[69] In an affidavit which he filed in the present proceeding, the defendant specified the failures as being the following:a) The mortgaged properties were sold at an undervalue. Moreover, despite requests by the defendant and Mr Kelly, the plaintiff hadrefused to disclose the valuation it had received for the properties and for the value of the trees on the properties, which were able to be sold off separately as part of the realization of the security.b) The plaintiff through its representative refused to permit Mr Kelly to attend the public auction and bid for the mortgaged properties at the mortgagee sale.c) The mortgaged properties were listed as "plus GST" on the tenderdocument. At the public auction, the plaintiff turned down an offer of $470,000.00 plus GST. Instead, the plaintiff sold the properties at $465,750.00 inclusive of GST, namely $74,750.00 less.d) There was further an issue with the GST in the sale; namely, the sum of $60,750.00 was wrongly paid as GST to Inland Revenue. This wasan error on the plaintiff's part in that no GST should have been paid.[70] In response, Mr Crossland for the plaintiff contended:4.22 Mr Nguy finally alleges that the Deed is oppressive due to five matters relating to the mortgagee sale process (essentially that the properties were sold at an undervalue). Prior to the Deed being signed, Mr Kelly and Mr Nguy raised some of these matters with ANZ. They both threatened to issue proceedings against ANZ. While ANZ denied the allegations, as part of the settlement reached with Mr Nguy and Mr Kelly, the Deed included a clause whereby Mr Nguy and Mr Kelly waived any possible claims against ANZ. But in any event, the allegations are addressed briefly below:a. The properties were sold, after a five week marketing campaign by a reputable real estate agent, at the highest price offered. The sale price was in line with market expectation and a valuation obtained from a registered valuer prior to the properties being sold.b. ANZ did not prevent Mr Kelly from bidding at the mortgagee auction. He also made offers after the mortgagee auction which he was unable to confirm by way of payment of a deposit.c. There was no obligation for ANZ to sell the trees on the properties. That said, the sale price for the properties reflected the trees located on the properties.d. The sale price was $405,000 plus GST of $60,750. ANZ paid GST to the IRD after receiving GST advice from BDO Auckland and after receiving written confirmation from Mr Nguy that GST was payable.[71] The sequence of events relating to the issue about sale at undervalue is as follows. The sale of the mortgaged properties occurred in December 2014 with the amount realised being $465,750 inclusive of GST. After the sale of the properties, discussions took place between the parties as to repayment of the deficit that remained owing following the mortgagee sale. During the course of the negotiations, counsel who represented the interests associated with Mr Kelly (and who to a limited extent also represented the defendant) wrote to the plaintiff on 20April 2015 stating his client's view that the plaintiff had failed to discharge itsobligations under s 176 of the Property Law Act 2007 and also what was alleged to be an obligation at equity to act in good faith when carrying out the mortgagee sale. The Deed was subsequently signed on 22 June 2015.[72] The first point that the plaintiff takes is that the Deed precludes the defendant from raising issues about the adequacy of the price obtained at mortgagee sale in response to any claim on the part of the plaintiff to recover the balance of the amount which remains unpaid in terms of the Deed. In particular the following paragraphs of the Deed, it is argued, preclude further defendant from raising these issues concerning the sale price achieved at mortgagee sale:2.1 The obligor hereby irrevocably acknowledges and confirms their liability to the bank pursuant to this deed without any deduction, cross claim, set-off or counterclaim whatsoever.6.1. The obligor hereby unconditionally and irrevocably waives, releases and discharges each and every claim, right of any kind, cause of action or any suit whatsoever that they may have, either alone or together with any other person and whether or not presently known about, against the bank in connection with the debt or in connection with any other matter arising before the date of this deed.6.2 The Obligor covenants not to bring suit or complaint against the bank in connection with the debt or any other matter arising before the date of this deed.[73] The Deed would appear to be binding upon the defendant. It contains waivers that are drawn in wide terms. The circumstances in which the mortgagee sale took place were known to the defendant before he executed the Deed. He had legal advice in relation to the Deed.[74] However, there is authority to the effect that the statutory intention of Parliament when enacting s 176 was that its operation could not be defeated by a "noset-off" contractual agreement between the parties. In Public Trustee v Ottow, Asher J stated the effect of s 176 in the following terms:8[14] The words of s 176 are mandatory in form. A mortgagee "owes" theduty. Under section 177 a mortgagee is not able to raise as a defence to a claim for breach of the duty imposed by s 176, that it was acting as the agent of the current mortgagor or any former mortgagor, and cannot claim compensation or indemnity from such current or former mortgagor. Given the absolute language, and the exclusion of these defences or indemnities, it must be assumed that the legislature intended that the duty could not be excluded by contract. The section would have very limited practical effect if this were not so. If mortgagees were able to impose effective no set-off clauses on mortgagors to nullify the effect of s 176, it could be expected that such clauses would become the norm. Mortgagees generally have the commercial negotiating power to impose limitation of liability clauses on borrowers and guarantors. It can be predicted that the benefits of s 176 would largely be excluded by contract. This could not have been the policy of the legislature. This was the conclusion of Faire AJ in Crown Money Corporation Ltd v Pink-Martin HC AK CIV-2008-404-000297 5 September 2008 at [77]. I note that Ms Keen for the plaintiff has not sought to argue otherwise, and does not rely on the no set-off clause.[75] I respectfully agree with the conclusions expressed in that judgment. Accordingly, I do not accept that the no set-off provision or the claim waiver agreement preclude the defendant from raising the question of whether there has been compliance with s 176.[76] The position of the defendant is that the plaintiff has failed to comply with s 176 of the Property Law Act which provides as follows:176 Duty of mortgagee exercising power of sale(1) A mortgagee who exercises a power to sell mortgaged property, including exercise of the power through the Registrar under section187, or through a court under section 200, owes a duty of reasonable8 Public Trust v Ottow HC Auckland CIV-2009-404-3825, 7 October 2009.care to the following persons to obtain the best price reasonably obtainable as at the time of sale:(a) the current mortgagor:(b) any former mortgagor:(c) any covenantor:(d) any mortgagee under a subsequent mortgage:(e) any holder of any other subsequent encumbrance.(2) A mortgagee who exercises a power to sell mortgaged property may not become the purchaser of the mortgaged property except in accordance with section 196 or an order of a court made under section 200.[77] The correct approach to application of s 176 was the subject of consideration by the Court of Appeal in the judgment in Long v ANZ National Bank Limited.9 In the judgment which he gave for the Court, White J summarised the position in that case as follows:[21] For present purposes we note the following specific points:(a) The statutory obligation is not to obtain the best price reasonably obtainable, but to take reasonable care to obtain the best price reasonably obtainable. That price might not necessarily be obtained.(b) When the property is sold in a forced sale, such as at a mortgagee sale, it is likely to sell at a substantial discount from the market value that the property would achieve in a sale undertaken by an owner not under financial pressure to sell.(c) Valuations lose much of their significance if reasonable care is taken, there has been a properly advertised and conducted auction, and the property has been sold at auction or by negotiation after the auction.(d) What constitutes reasonable care will always turn on the facts of the case. The steps taken by the mortgagee in fulfilling the statutory duty have to be looked at in the round.(e) In considering the reasonableness of the care taken, the courts should be slow to second guess the actions of a mortgagee acting on apparently sound professional advice.9 Long v ANZ National Bank Ltd [2012] NZCA 132.[78] I intend to be guided by the above remarks when determining the s 176 issue in the present case.[79] The case which the defendant put forward was that there was evidence of a failure to comply with s 176 because the figure ultimately obtained at the mortgagee sale was substantially below the figure that the real estate agents had estimated prior to the sale. In their final marketing report dated 25 November 2014 Barfoot & Thompson revisited their earlier estimate of value and stated that in the light of certain negative factors which had apparently not been considered by them previously including restrictions on subdivision, the cost of remedial works that were required to be taken pursuant to an abatement notice which was in effect relating to the property, and other matters that the likely mortgagee sale price would be between $600,000 and the then government valuation of approximately $800,000. These expectations proved to be considerably over the mark as it turned out.[80] In addition to obtaining estimates from the real estate agents, though, the plaintiff had obtained a valuation of the land and a separate valuation of the timber crop. As I understand the evidence (and I have not received submissions on it) the combination of the two valuations just mentioned was approximately $363,000 which was of course less than the amount achieved at auction.[81] However, the issue of estimates of value needs to be kept in context. The mortgagee, having elected to proceed by mortgagee sale, is not bound to sell at any particular price. There is no obligation to only sell at such an estimated figure. In the end, the major influence that estimates of value are likely to have on the mortgagee, where the sale method is by auction in circumstances where it is assumed there will be a competent and comprehensive marketing program, is that it provides guidance in regard to where the reserve or minimum price should be set. But in the end, the value of the property will be the price on the day when the property is sold by auction, again assuming that there has been a reasonable marketing and publicity program undertaken ahead of the auction. In the present case, it turns out that neither the real estate agents nor the combined valuation figures was correct. One was substantially higher than the actual figure obtained and the other lower.[82] Further, in the circumstances of the present case the land had unusual characteristics including some of those to which I have already made mention. These may well have affected the ability of those called upon to do so to give accurate estimations of value.[83] On the face of it, and in the absence of conflicting evidence put forward by the defendant, I will assume that the steps that the real estate agents say they took were actually taken; that what they have put forward as a suitable marketing and sales program ahead of the auction was actually carried out; and that acceptable efforts were in fact taken to excite interest in the upcoming auction.[84] It will be recalled that the defendant also criticised the efforts which were made to sell the property at mortgagee sale in his evidence, to the effect that Mr Kelly was excluded from the auction. It would appear that neither of the deponents actually attended the auction sale and neither of them finds himself, therefore, in a position to offer first-hand evidence on this subject. But what is to be noted is that after the property was passed in at auction, Mr Kelly in the following days sought to reach an agreement with the plaintiff under which he could buy the property. In the end, though, the trail of emails which has been placed in evidence and which are annexed to the affidavit of Mr Lal establish that the liquidators were unable to tie Mr Kelly down to actually paying a deposit in support of the price which he offered. Following the unsuccessful efforts in that regard, the plaintiff gave up on Mr Kelly as a potential purchaser. Whether that decision was reasonable or not is coloured by the fact that the liquidators considered that Mr Kelly had been very dilatory at an earlier stage of the dispute when they were attempting to settle the terms upon which the trustees of the Trust and the defendant would be permitted to discharge their liability to the plaintiff. After giving what they considered was a reasonable opportunity to Mr Kelly to close the transaction for purchase, the plaintiff turned its attention to the only other offer which was the one that it ended up accepting.[85] On the basis of the evidence before the court, I am unable to conclude that there is a real question to be tried about whether or not the plaintiff as mortgagee breached its obligations as mortgagee in selling the property. The significance ofthat conclusion is that the plaintiff is able to negatived the existence of any arguabledefence arising from breaches of the mortgagee's duty and, further, that a defence regarding the sale of the mortgaged properties at an undervalue it is not available to the defendant as a ground for alleging that there has been oppressiveness in this case which should lead to the Deed being reopened by the court.[86] The question of whether the mortgagee correctly accounted for GST on the sale is not relevant to the duty to take reasonable care to obtain the best price obtainable at the time of sale. If the contention being put forward is that GST ought to have been added to the sale price, it fails because there is no evidence that the market would have supported a price 12.5% higher than what was obtained so that the proceeds of sale achieved were $465,750 net of GST, rather than inclusive of GST. Nor has the defendant addressed any evidence to support an alternative argument that the sale could have been achieved on a GST neutral basis which entitled the mortgagee to proceed as though there was no obligation to account to the Commissioner of Inland Revenue for GST.Summary[87] In his opposition to the plaintiff's application for summary judgment, thedefendant identified four matters which, in his view, individually amounted to areasonably arguable defence against the plaintiff's claim. I do not share that view.The defendant voluntarily offered a personal guarantee of the Trust's obligations,which he expressly acknowledged in the Deed. There was no identifiable misrepresentation on the part of the plaintiff which induced the defendant to enter into Deed. Nor could it be said, I think, that the Deed was oppressive within themeaning of the CCCFA. Finally, there is no evidence to support the defendant'scontention that the plaintiff breached its duties as mortgagee when it sold the mortgagee properties prior to the negotiation of the Deed.[88] I am satisfied that the plaintiff has demonstrated that the defendant does not have an arguable defence to its claim and summary judgment is granted accordingly as follows:a) judgment is entered for the principal amount of $308,209.50;b) the defendant is adjudged liable to pay contractual interest on the sum of $308,209.50 at the rate of 10% to the date of judgement..Costs[89] The plaintiff is entitled to costs pursuant to cl 3.3 of the Deed. The parties'counsel agree that they will attempt to settle those costs so that an order can be made without the parties needing to be heard further by the court. I reserve leave to either party within 15 working days to make further application to the court for costs directions._____________J.P. DoogueAssociate Judge