ASB BANK LIMITED v WARD AND WARD [2015] NZHC 2909

ASB BANK LIMITED v WARD AND WARD [2015] NZHC 2909 [20 November 2015]IN THE HIGH COURT OF NEW ZEALANDWHANGAREI REGISTRYCIV-2014-488-135[2015] NZHC 2909BETWEEN ASB BANK LIMITEDPlaintiffAND JILL DENISE WARDANDMARTIN WARDDefendantHearing: 12 June 2015Appearances: E C Gellert for PlaintiffDefendants in personJudgment: 20 November 2015JUDGMENT OF ASSOCIATE JUDGE R M BELLThis judgment was delivered by me on 20 November 2015 at 4:00pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors:Simpson Grierson (E C Gellert) Auckland, for ASB BankINDEXParagraphIntroduction [1]The Wards' Complaint to the Banking Ombudsman [11]Irresponsible lending [13]Securitisation [16]Release of Mrs Ward [18]Disclosure under the Credit Contracts and Consumer Finance Act [21]Oppression under the Credit Contracts and Consumer Finance Act [32]Non-disclosure [39]Belated reamortisation of a term loan [42]Fees and third party payments [47]Breach of s 176 of the Property Law Act 2007 [48]Mr Ward's attempt to recover chattels [63]Result [68]Introduction[1] ASB Bank Ltd sues Mr and Mrs Ward for $271,046.06 as the outstanding amount owing after it sold Mrs Ward's property at 17 Dolphin Place, Tutukaka as mortgagee. Mrs Ward is the borrower. Mr Ward gave a guarantee. The bank applies for summary judgment.[2] Some facts are not in dispute. Mrs Ward bought the Dolphin Place property in June 2004 with a loan from the bank. The bank took a registered first mortgage over the property. In 2005, she borrowed from the bank again to buy a property at 14 Taonga Lane, Tutukaka. A company, Poor Knights Dive Stay Ltd, took title. In October 2006 she borrowed again to buy a property at 33A Kopipi Crescent, Ngunguru in the name of a company, Bach 33 Ltd. In March 2007, Mr Ward gave aguarantee on the bank's standard form in support of Mrs Ward's obligations to thebank.[3] Mr and Mrs Ward had difficulty keeping up their payments. They first fellbehind in 2007. The Wards' position worsened with the closure in 2008 of the Oceans Hotel where their business was located. The Kopipi Crescent property was sold in September 2009. The Taonga Lane property was sold in June 2010. The Wards still struggled. There were further defaults. One of the loans was reamortised. Mrs Ward put the Dolphin Place property on the market in December 2011 with a listing price of $640,000 but was not able to sell it. From time to time arrangements were negotiated between the bank and the Wards for arrears to be paid off. The bank served notices under the Property Law Act 2007 in August 2012 and January 2013. Each time the defaults in the notices were remedied. In June 2013, the bank served a notice under s 119 of the Property Law Act on Mrs Ward and a notice under s 122 of the Property Law Act on Mr Ward. This time the defaults were not remedied. The bank gave notice to the Wards that all monies secured under the mortgage had become due and payable.[4] The bank obtained a report from a registered valuer as to the market value and forced sale value of the Dolphin Place property. The valuer found the market value to be $390,000 and gave a forced sale value of $270,000 to $310,000. The bank instructed Whangarei land agents, the local Bayleys franchise, to market the property. After an auction on 3 October 2013 the property was sold for $357,000 with settlement set for 31 October 2013. Settlement was brought forward to 15 October 2013. The net proceeds from the sale of the Dolphin Place property were $339,366.91, leaving a balance of $271,046.06 under the loans. The bank claims that sum plus interest at five per cent per annum from 17 October 2013.[5] The bank sues on these loan agreements:(a) A term loan agreement of 14 March 2007 for $120,000 repayable over 25 years.(b) A term loan agreement of 30 May 2008 for $440,000 repayable over 25 years.(c) A term loan agreement of 20 June 2008 for $274,100 repayable over 25 years.(d) A facility agreement of 6 August 2010 allowing withdrawals of up to $13,800 for a term of five years.[6] In addition, there was a current account, called a deduct account, into which Mrs Ward was required to pay funds to meet instalments falling due under the other loans. All the loan agreements were repayable upon demand. No question arises as to the need for a notice under s 119 of the Property Law Act before acceleration.[7] The Wards do not have a lawyer. They have done their best to place before the court all matters which they consider should be taken into account in answer tothe bank's application for summary judgment. They have clearly tried hard to followthe practice and the rules of the court. All the same, they are at a disadvantage through not having legal advice. For example, they believed that only they couldgive evidence in opposition to the summary judgment application. They did not appreciate that they could file affidavits by others. I have taken those difficulties into account.[8] Under r 12.2 of the High Court Rules the bank needs to satisfy the court that the Wards do not have any defence to the cause of action against them. InKrukziener v Hanover Finance Ltd, the Court of Appeal said:1The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried. The court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show that there is no defence, the defendant will have to respond if the application is to be defeated. 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. 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.(Citations omitted).[9] Except for the particular matters raised by the Wards, the bank has made out its case under r 12.2. If the Wards had not opposed, I would have given the bank summary judgment. The question is whether the bank can show that the Wards have no defence in light of these arguments by the Wards:(a) Their complaint to the Banking Ombudsman(b) Irresponsible lending(c) Securitisation(d) Release of Mrs Ward(e) Disclosure under the Credit Contracts and Consumer Finance Act 20031 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].(f) Oppression under the Credit Contracts and Consumer Finance Act(g) Breach of s 176 of the Property Law Act 2007(h) Mr Ward's attempt to recover chattels from the property.[10] Apart from (d) Mr Ward's position as guarantor stands or falls withMrs Ward's position as borrower. As guarantor he may raise any defence to theclaim which Mrs Ward could use to oppose the bank. None of the other defences require him to be considered separately from Mrs Ward.The Wards' complaint to the Banking Ombudsman[11] In 2014, the Wards complained to the Banking Ombudsman about the bank. The Banking Ombudsman considered their complaint and rejected it. Some of the matters that the Wards have raised in this proceeding were also the subject of their complaint. The Banking Ombudsman's decision does not prevent the Wards raising the same matters in opposition to the bank's proceeding. There is no judicialdecision by a judicial tribunal which bars the Wards. Res judicata does not apply. Whether the Banking Ombudsman upheld or rejected their complaint is irrelevant for this case.[12] The fact that the Wards made a complaint to the Banking Ombudsman does not give ground for staying this proceeding. The bank began this proceeding in July2014. The Banking Ombudsman's decision was given in December 2014. Thesummary judgment application had its first call on 9 February 2015.Irresponsible lending[13] Mrs Ward asserts that there was irresponsible lending on the part of the bank. On lender liability the Laws of New Zealand says:2When making loans that carry an unusual element of risk or novelty, a lender may owe a duty of care to the borrower, arising from both common law principles and the Fair Trading Act 1986. The precise content of the duty2 Laws of New Zealand Banking at [70]. (footnotes omitted).must be assessed by a consideration of the reasonable expectations in all the circumstances about the appropriate conduct of the lender; but may include a duty to advise the intending borrower of the unusual risks, and possibly to monitor and manage the loan after it is granted. In assessing these expectations the actions of the customer will be objectively considered, including any communication of the expectations to the lender and thelender's response. The commercial experience of the customer is relevant,as is the customer's need for the transaction.[14] The main authority cited is Australian, Commonwealth Bank of Australia v Mehta.3 No New Zealand cases are cited. Instead New Zealand cases have emphasised that in the general run a bank does not owe any duty to a customer to guard against entering into an improvident transaction. In Bank of New Zealand v Geddes, Asher J reviewed authorities and held that in a standard loan by a bank secured by a mortgage, the bank did not owe any duty in contract, tort or equity (through a fiduciary duty).4 In Dovey v Bank of New Zealand, the Court of Appeal held against an implied contractual duty on a bank to warn a customer.5 InForivermor Ltd v ANZ Bank New Zealand Ltd the Court of Appeal held:6It is well-established that, as a general principle, a bank does not ordinarily owe its customers any general duty to furnish careful advice on business or banking transactions, whether in contract or tort, unless it specifically undertakes to do so.[15] Mrs Ward says that total borrowings were in the region of $1.1 million at one point, but that she is not aware of due diligence by the bank in this respect. No doubt the bank now regrets having made loans to Mrs Ward. But complaints of irresponsibility in assessing a borrower's ability to repay a loan do not by themselves bring the matter within the lender liability principle set out above. There is no evidence to support an argument that the bank came under a duty to explain of the sort described in the Laws of New Zealand. Mrs Ward's complaint as toirresponsible lending does not raise a recognisable defence.3 Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 (CA).4 Bank of New Zealand v Geddes HC Auckland CIV-2008-404-8082, 28 May 2009 at [18]-[27].5 Dovey v Bank of New Zealand [2000] 3 NZLR 641 (CA) at [38].6 Forivermor Ltd v ANZ Bank New Zealand Ltd [2014] NZCA 129 at [56] (footnote omitted). See also Fortes v Bank of New Zealand [2014] NZCA 346 at [13].Securitisation[16] The registered valuer instructed by the bank sent a copy of his report to a mortgage insurance company. The Wards are suspicious that the mortgage had beensecuritised or that the bank's loss arising from the loan might be covered by insurance. The bank's evidence is that neither is the case.[17] Those matters are irrelevant to the bank's claim against the Wards. Even if the mortgage were securitised, or the bank had insurance cover for the loss, that would not stand in the way of the bank enforcing its rights under its loans. Any proceeding would still be in the name of the bank. These matters do not give the Wards an arguable defence.Release of Mrs Ward[18] On 10 July 2012, the bank sent a formal demand notice to Mr Ward. Amongst other things the letter said:As previously advised, as guarantor you will be held ultimately responsible if the borrower is unable or unwilling to meet their obligations to the bank.[19] Mrs Ward contends that as a result of that letter she has been released from liability. That is not what the letter says. The letter does no more than make it clear to Mr Ward that he is liable as guarantor, if Mrs Ward as borrower does not pay. The letter says nothing about releasing Mrs Ward from liability. To the contrary it assumes that Mrs Ward will continue to be liable. That is because a guarantor'ssecondary liability presupposes that there is another person with primary liability to the creditor.[20] Besides, the bank made a number of demands on Mrs Ward which showed her that the bank continued to regard her as liable. That included a demand letter of 10 July 2012, as well as further demands dated 30 July 2012, 2 November 2012 and 14 May 2013, Property Law Act notices served on her on 30 August 2012, 6 December 2012 and 27 June 2013, and letters from the bank's lawyers dated 17October 2013 and 22 October 2013.Disclosure under the Credit Contracts and Consumer Finance Act 2003[21] The Wards say that the bank breached the Credit Contracts and Consumer Finance Act with regard to disclosure of penalties and interest rates. Their specific complaint is that the bank did not disclose interest rates charged on the deduct account, 12-3093-0213935-00. That was the account into which the Wards were required to make payments to cover instalments due under the various loans. Thebank's response is:(a) disclosure is not required, except for consumer credit contracts;(b) the interest charges the Wards are complaining about are for unauthorised overdrafts which fall within an exception, s 15(1)(b) of the Consumer Contracts and Consumer Finance Act; and(c) it did make appropriate disclosure.[22] The disclosure rules under Part 2 of the Credit Contracts and Consumer Finance Act apply only to consumer credit contracts.7 Under s 11(1)(b) one of the requirements for a consumer credit contact is that the credit is to be used, or is intended to be used, wholly or predominantly for personal, domestic or household purposes. Under s 12 investment by a debtor is not a personal, domestic or household purpose. Under s 13 in any proceedings in which one party claims that a credit contract is a consumer credit contract, it is presumed that the credit contract is a consumer credit contract unless the contrary is established. That presumption applies in this proceeding.[23] The bank's loans to Mrs Ward for the purchase of the properties at TaongaLane and Kopipi Crescent were not consumer credit contracts. The loans enabled companies to take title. Mrs Ward did not use the properties for household or personal purposes. They were investments. On the other hand the loan for the purchase of Dolphin Place and any refinancing of that loan are consumer credit7 Credit Contracts and Consumer Finance Act 2003, s 10.contracts under s 11. The bank accepts that the presumption under s 13 applies to the Dolphin Place loans.[24] Even though they are not all consumer credit contracts, the bank did make appropriate initial disclosure under s 17 and Schedule 1 of the Credit Contracts and Consumer Finance Act for the term loan agreements and the facility agreement on which there were outstanding balances when the bank served its last notices under s 119 and 122 of the Property Law Act 2007. It made the disclosure in the loan agreements.[25] The Wards however focus on the deduct account. The bank says that the deduct account was to be kept in credit and it was not required to make disclosure when it went into debit. It relies on s 15(1)(b) and s 15(2) of the Credit Contracts and Consumer Finance Act:Certain contracts not consumer credit contracts(1) The following contracts are not consumer credit contracts:(b) a contract that is a credit contract merely because a person'saccount with a creditor is debited and—(i) the effect of the debit is to put the account into overdraft; and(ii) the creation of the overdraft has not been agreed between the creditor and the person before the debit of the account:(2) Subsection (1)(b) applies whether or not—(a) the creditor knows at the time the account is debited that the debit would have the effect of putting the account into overdraft; or(b) the creditor makes a charge (whether by way of an interest charge or otherwise) relating to the creation of the overdraft.[26] The deduct account was subject to the bank's Personal Banking Terms andConditions:9.5 Where we agree to give you an unarranged overdraft, you will be charged interest at our unarranged overdraft interest rate and charged a monthly unarranged overdraft fee. Please refer to our Guide to Fees brochure for this fee. A copy is available from any ASB branch and at asb.co.nz.9.6 We will charge you interest on the daily unarranged overdraft balance. Interest will be calculated daily and charged to your account on a monthly basis. The current rate is available from any ASB branch and at asb.co.nz.9.7 Interest rates on overdrafts and other amounts owed to us are subject to market fluctuations and may be very by us at any time. This is subject to any other agreement you make with us.[27] The bank's Guide to Fees provided that the monthly overdraft facility fee forunarranged overdrafts was .12 per cent of the highest daily overdrawn balance, with a minimum of $10.00.[28] The term loan agreements provided for deductions from the account for payment of term loan instalments. Clause 2.9 of the loans' standard terms and conditions provided:2.9 Authority to charge: Your Loan Account, the Deduction Account, or any bank account you may have with us, may be charged with any amount due and payable including but not limited to any Instalment, any interest payable under the Penalty and Default interest clauses, and any costs for which we are entitled to be indemnified or reimbursed either under this Agreement, any Security Document or any other agreed Terms and Conditions. Such amounts may be charged immediately to your Loan Account or Deduction Account (and will be due and payable from that date) and interest will accrue on those amounts from that day in accordance with clause 2.6 and/or the Penalty and Default Interest clauses. This may occur even if the amount charged exceeds the Loan Amount or takes the balance of your Loan Account or Deduction Account or any other bank account over any permitted limit. If the Loan Account or Deduction Account or any other loan account or any other bank account is overdrawn we may charge interest at our usual Unarranged Overdraft Interest Rate and any such overdrawn amount shall be regarded as remaining due and payable under this Agreement until the amount has been paid or satisfied in full.(The bank emphasises the part in italics).[29] The bank's evidence is that apart from a brief temporary overdraft in June 2008 (an overdraft facility for $17,000 of loan arrears pending receipt of funds from overseas interest only for 12 months), the Wards never had an agreed overdraftfacility. The Wards' evidence does not contradict that. When the deduct accountwent into debit as a result of there being insufficient funds to meet loan instalments, that was an unarranged overdraft in terms of the bank's standard conditions. It fallswithin s 15(1)(b) and (2) of the Credit Contracts and Consumer Finance Act 2003. The disclosure requirements in Part 2 of the Act do not apply.[30] The bank has included in its evidence copies of bank statements for the deduct account from November 2009 to September 2013. These consistently show charges for interest and overdraft facility fees, and state the overdraft interest rate charged (22.5 per cent per annum). The bank statements meet the requirements for continuing disclosure statements under s 19 of the Credit Contracts and Consumer Finance Act 2003:Content of continuing disclosure statement(1) Every continuing disclosure statement must contain as much of the following information as is applicable to the consumer credit contract:(a) the opening and closing dates of the period covered by thestatement; and(b) the opening and closing unpaid balances; and(c) the date, amount, and a description of each advance during thestatement period; and(d) the date and amount of each interest charge debited to the debtor'saccount during the statement period; and(e) the date and amount of each amount paid by the debtor to thecreditor, or credited to the debtor, during the statement period; and(f) the date, amount, and a description of each fee or charge debited tothe debtor's account during the statement period; and(g) the amount and the time for payment of the next payment that mustbe made by the debtor under the contract; and(h) the annual interest rate or rates during the statement period(expressed as a percentage or percentages); and(i) in the case of a credit card contract, a prescribed minimum repaymentwarning (for example, to warn that if the debtor makes only a minimumpayment each month, the debtor will pay more interest and it will take thedebtor longer to pay off the unpaid balance) and other prescribedinformation in connection with payments under a credit card contract.[31] If the bank were under an obligation of continuing disclosure under s 18 of the Act, the bank has satisfied that requirement. The bank has shown that the Wards do not have any defence in respect of the alleged failure to make disclosure under the Credit Contracts and Consumer Finance Act.Oppression under the Credit Contracts and Consumer Finance Act[32] Part 5 of the Credit Contracts and Consumer Finance Act allows for reopening of oppressive credit contracts, even if they are not consumer creditcontracts. Under s 118, "oppressive" means:oppressive, harsh, unjustly burdensome, unconscionable, or in breach of reasonable standards of commercial practice.[33] Under s 120 the court may reopen a credit contract if in any proceedings it considers that:(a) The contract is oppressive; or(b) A party has exercised, or intends to exercise, a right or powerconferred by the contract in an oppressive manner; or(c) A party has induced another party to enter into the contract byoppressive means.[34] Section 123 provides:A credit contract, a consumer lease, a buy-back transaction, a term of a credit contract, a consumer lease, or a buy-back transaction, or an act performed under, or in connection with, a credit contract, a consumer lease, or a buy-back transaction is not oppressive if the contract, lease, transaction, term, or act would not have been considered oppressive at the time, and in the circumstances, that it was made or performed.[35] Section 124 gives guidelines for reopening credit contracts:(1) In deciding whether section 120 applies and whether to reopen a credit contract, consumer lease, or buy-back transaction (anarrangement), the court must, to the extent that the following matters are applicable in the particular circumstances, have regard to:(a) all the circumstances relating to the making of the arrangement, orthe exercise of any right or power conferred by the arrangement, orthe inducement to enter into the arrangement; and(b) whether the creditor or transferee has, in relation to any aspect of thearrangement (including the creditor's or transferee's conduct inentering into the arrangement), complied with the lenderresponsibility principles (see section 9C(2)); and(c) the relative bargaining power of the parties; and(d) whether, taking account of the particular characteristics of thedebtor, lessee, or occupier (for example, his or her age or physical ormental condition), that person, or the person's representative, wasreasonably able to protect that person's interests; and(e) in the case of a credit contract, whether the contract is a consumercredit contract; and(f) whether, before entering into the arrangement, the debtor, lessee, oroccupier obtained independent legal or other professional advice inrelation to that arrangement; and(g) whether the creditor, lessor, or transferee, or any person acting inthe interests of that person, subjected the debtor, lessee, or occupierto unfair pressure or tactics or otherwise unfairly influenced thedebtor, lessee, or occupier to enter into the arrangement and, if so,the nature and extent of that unfair conduct; and(h) the terms of other arrangements under which the debtor, lessee, oroccupier could have obtained the same or substantially similarcredit, hired goods, or finance from a person other than the creditor,lessor, or transferee, including—(i) the costs of borrowing, costs of the lease, or costs of thebuy-back transaction (as the case may be) under those otherarrangements; and(ii) whether the arrangement under consideration imposessignificantly more onerous terms on the debtor, lessee, oroccupier than would be imposed under those otherarrangements; and(i) the amount payable by the debtor, lessee, or occupier under thearrangement; and(j) the amount of any payment required as a condition of the fullprepayment under the arrangement, including the creditor'sexpenses and the likelihood that the amount repaid could bereinvested on similar terms; and(k) the form of the arrangement, including whether it is expressed inplain language in a clear, concise, and intelligible manner; and(l) whether the terms of the arrangement—(i) allow the debtor, lessee, or transferee to be reasonably able to comply with his or her obligations under the arrangement; and(ii) are reasonably necessary to protect the interests of the creditor, lessor, or transferee; and(m) the length of time the debtor, lessee, or occupier has had to remedy any default; and(n) if the creditor, lessor, or transferee has refused to release, or has agreed to release subject to conditions, a security interest relating to the arrangement, the obligations secured by the security interest and the extent of security that remains after the release or conditional release; and(o) whether action by the creditor, lessor, or transferee in relation to the enforcement of, or recovery under, the arrangement was lawful in the circumstances; and(p) any other matters that the court thinks fit.(2) If a guarantee is treated as forming part of the credit contract under section 119(1), the references to the debtor in subsection (1)(d), (f), (g), (i), and (l) must, in relation to the guarantee, be treated as including the guarantor.[36] There is also guidance from the case law, including cases decided under the Credit Contracts Act 1981. The provisions for reopening credit contracts for oppressiveness under that Act have been reproduced in the 2003 Act. In Greenbank New Zealand Ltd v Hass, the Court of Appeal said:8The various words which together form the definition of the term"oppressive" all contain different shades of meaning but they all contain the underlying idea that the transaction or some term of it is in contravention of reasonable standards of commercial practice. In a sense that phrase gives the underlying commercial rationale for the earlier words or phrases. Something which is, for example, unjustly burdensome must necessarily be regarded as being in contravention of reasonable standards of commercial practice; similarly with something harsh. To determine whether a contract or term is oppressive within any of the words or phrases in the definition, it is necessary to have some basis of comparison. In the context the comparator can only be what would be expected or acceptable in terms of reasonable standards of commercial practice. Something which is in accordance with such reasonable standards could hardly be held to be oppressive. Conversely something which is not in accordance with (ie in contravention of) such8 Greenbank New Zealand Ltd v Hass [2000] 3 NZLR 341 (CA) at [24].standards is, by definition, oppressive. It is therefore important, unless the oppressive aspect is beyond rational dispute, for the Court to be properly informed how the contract or term measures up against reasonable standards of commercial practice.[37] In G E Custodians v Bartle, the Supreme Court added the qualification that the courts set the standard of reasonableness:9The Court of Appeal has correctly said in Greenbank New Zealand Ltd v Hass that the various words which together form the definition of the term"oppressive" all contain different shades of meaning but they all contain theunderlying idea that the transaction or some term of it is in contravention of reasonable standards of commercial practice. That sets an objective standard. A contract or course of conduct may therefore, as Arnold J also said, be treated as oppressive even though the party whose conduct is said to be oppressive may be (subjectively) blameless because the party is simply following industry practice. Where that practice is in breach of reasonable standards, compliance with it will not immunise a lender. It is for the courts rather than the industry to set the standard.[38] The Wards raise three matters as oppressive:(a) Non-disclosure;(b) Belated reamortisation of a term loan; and(c) Fees and third party paymentsNon-disclosure[39] The Wards' submission includes this:Terms and conditions were not appropriately disclosed and as a result of other actions the contract was unjustly burdensome.[40] The loan agreements, guarantee and mortgage set out some of the bank'sterms and conditions. Having signed those documents, the Wards cannot say that they did not know the terms set out on them. The bank also relies on terms and conditions in other documents, which the Wards did not sign. Those otherdocuments set out the bank's standard terms and conditions, for example, the bank'sPersonal Banking Terms and Conditions and its Guide to Fees. Those standard terms9 G E Custodians v Bartle [2010] NZSC 146, [2011] 2 NZLR 31 at [46] (footnotes omitted).and conditions are expressly incorporated into the loan agreements. From myexperience on banks' summary judgment applications, I am aware that it is normalpractice for banks to incorporate their standard terms into loan agreements in this way. Invariably the customer is given a brochure setting out the standard terms when the loan is taken out. The Wards have not identified any particular terms as harsh or unjustly burdensome.[41] Besides, the question of disclosure under Part 2 of the Credit Contracts and Consumer Finance Act has been addressed above. Where the disclosure requirements under Part 2 have been satisfied, it is unlikely that the court would find oppressiveness under Part 5 of the Act. The Wards have not identified anything by way of non-disclosure to bring this case within Part 5.Belated reamortisation of a term loan[42] The Wards complain at the way the bank treated the term loan in respect of the Kopipi Crescent property after the property was sold. Mrs Ward says that she was encouraged to sell the properties to reduce her monthly outgoings and to assist with her financial position. She says that as the debt to the bank would be reduced, the monthly payments would be reduced also. She says that after the sale the bank continued to charge the deduct account with the same amounts for instalments under the loans. She expected that the instalments would be reduced so that the loan would be repayable over its entire original term rather than shortened. Mrs Ward says that the Kopipi Cresent property sold in September 2009, with the monthly payments remaining at $2,993.66. She took the matter up with the bank in July 2010 when the monthly payment was reduced to $1,173.98.10 Her complaint is that it was oppressive for the bank not to adjust the monthly repayments promptly after the sale, rather than later in July 2010 when she raised the matter with the bank.[43] The bank's evidence is that after the sale of the Kopipi Crescent property no payments were made to the deduct account until the sale of the Taonga Lane property in July 2010 (apart from one credit of $26.82). That meant that loan10 Her first affidavit refers to the sale of Taonga Lane instead of Kopipi Crescent, but that was a mistake – see her second affidavit at [20].payments from the deduct account put the account into overdraft. There were interest charges as a result. The bank says that in September 2010 Mrs Ward contacted it with a view to reamortising the loan payments. The ASB agreed to do so and also credited the deduct account with $3,900 as an adjustment for the additional interest that had been charged on the deduct account since June 2010.[44] The Wards' submissions say:At best, the actions were misleading. It meant that we were paying far more than we needed to, at a time when we were vulnerable and the bank were asserting that they were trying to assist us out of financial hardship. Not to reduce our monthly outgoings, bearing in mind these circumstances, and when it had been discussed, and when it was the main purpose for us in disposing of assets, seems bizarre and unjust.[45] The Wards' complaint is that the bank could have done more to help than it did. Implicit in the Wards' submission is an assumption that the bank was undersome duty to help them and if the bank did not help, that was oppressive.[46] A lender may for good business reasons choose not to enforce its loan to the letter and may make new arrangements with borrowers to assist them in their difficulties. But that is a matter for the commercial judgment of the lender. Any unwillingness to do so does not make the matter a case for oppression. The fact that when the Wards did take the matter up with the bank it did adjust the monthly instalments payable and gave a credit for some of the interest charged points againstoppression. The Wards challenged the bank's calculation of the interest adjustment of $3,900. Even so, when the matter is viewed in its entirety, the bank has satisfied me that the Wards do not have an argument for oppression.Fees and third party payments[47] Mrs Ward's second affidavit says at [16]:Application of fees which have not been appropriately disclosed and unnecessarily high, third party payments mean this contract should be considered to be oppressive, in our opinion. The way in which fees were applied and funds not allocated as indicated made our situation seem far worse than it in fact was and affected my view of the situation and influenced subsequent actions.Mrs Ward has not identified any particular deduction she takes issue with. The bank has made deductions for interest. It has also charged for its expenses incurred on the sale of the Dolphin Place property, but these are all matters of standard commercial practice. They do not go to oppression under the Credit Contracts and Consumer Finance Act.Breach of s 176 of the Property Law Act 2007[48] The Wards say that when the bank sold the Dolphin Place property it breached its duty to them under s 176 of the Property Law Act 2007:176 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 section 187, or through a court under section 200, owes a duty of reasonable 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.[49] Breach of the duty not only gives a cause of action. It may also be raised as an affirmative defence, as in proceedings such as this one. Defendants may contend that if the mortgagee had complied with its duty, the property would have sold for more and the amount of the shortfall would be less.[50] Asher J's judgment in Public Trust v Ottow is generally taken as summarising the principles as to the standard of care under s 176:1111 Public Trust v Ottow (2009) 10 NZCPR 879 (HC) at [17].(a) a mortgagee has no duty at any time to exercise the powers of sale or possession. In default of any provision to the contrary in the mortgage, the power of sale is for the benefit of the mortgagee, who can sell at any time in accordance with the mortgagee's convenience.(b) the mortgagee's duty of care is to take reasonable care to obtain thebest price reasonably obtainable at the time of sale.(c) it does not matter that the time may be unpropitious and that by waiting a higher price could be obtained.(d) a mortgagee is under no obligation to improve the property or increase its value.(e) a mortgagee sale for a price less than the current market value assessed by valuers does not, of itself, establish a breach of duty, although a large discrepancy may indicate a failure to take reasonable care.(f) a mortgagee does not have any general duty to maintain properties prior to sale.(g) following the service of a Property Law Act notice there is no duty on a mortgagee to keep a guarantor informed of sales activities.(h) the mortgagee is not entitled to sell in a hasty way at a knock-down price sufficient to pay the debt, which because of the speed of sale leads to a lower price than could otherwise be obtained.(i) proper care must be taken to expose the property to the market and to obtain the best price reasonably obtainable.[51] This extract has been cited many times:12The following steps indicate that a mortgagee has made reasonable efforts to obtain the best reasonably obtainable price:(a) The appointment of a reputable real estate agent to market the property.(b) Obtaining a valuation report from an experienced valuer as a guide to what could reasonably be expected for the property.(c) Marketing over a reasonably long period of time.(d) An extensive advertising and promotional campaign.(e) A properly conducted auction.(f) A sale price that, given all the circumstances, can be reconciled with expert opinion as to value.12 At [31].[52] It is to be remembered that that is guidance only. It is not a substitute for compliance with the duty under s 176. Whether there has been compliance will be a question of fact and degree.13[53] It has also been recognised that the mortgagee shares with the mortgagor and guarantors an incentive to maximise the price obtained. In those circumstances it is not to be assumed that the mortgagee has acted in a way that is contrary to its own interests as well as the interests of others.[54] The bank says that it followed the guidance offered by Asher J in Public Trust v Ottow. It points to the registered valuation it obtained and the marketing report from Bayleys Real Estate recommending a four-week marketing campaign. Over a four-week period there was extensive advertising in The New Zealand Herald, theNorthland Property Guide, on three websites, by a sign outside the property, by advertising in the real estate agent's shop window, by emails to other Bayleys'agents, and to Bayleys' clients, distribution of brochures, flyers and postcards, taking prospective purchasers to the property and putting on open homes. The land agent provided weekly marketing reports to the bank on steps taken to market the property, website hits and feedback from potential purchasers. The auction was well attended and four different parties bid for the property. While the property did not initially reach the reserve, there were negotiations which led to a sale at a price of $350,000. The bank says that price was satisfactory given that it exceeded the valuer's report asto a price likely to be obtained on a forced sale. With that, the bank says that it has complied with its duty under s 176.[55] The Wards criticise the report by the registered valuer for omitting certainsales which the Wards consider relevant. The valuer's affidavit in reply addressesthose concerns and gives satisfactory reasons why the sales the Wards refer to are either irrelevant (because they are too old) or are consistent with his valuation. He regards the outcome as consistent with his valuation report. I see no reason to take issue with his report. The valuer's report was guidance to the bank as to how itcould comply with its duty under s 176. After the sale, it also sets a standard by which to assess the sale price.13 Robertson v ASB Bank Ltd [2014] NZCA 597 at [30].[56] It can also be noted that although they are not expert valuers, the land agent's initial marketing appraisal estimated the value of the property between $350,000 and $400,000. Both the valuer and the land agent make much of the poor state of the property, particularly in relation to other homes in Dolphin Place.[57] The Wards also challenged the marketing by the land agent. They do not criticise how widely the property was marketed. The issue is the quality of the advertising. They make these points:(a) They co-operated by leaving the property so as not to obstruct the sale.(b) They take issue with the description of the property as "abandoned family home". The house was wrongly portrayed as only fit for demolition.(c) There were spelling mistakes in one advertisement: "abandoned family hom" and "affordable opportuny".(d) Photographs taken of the property seemed to demonstrate only the negative aspects.(e) The property enjoys uninterrupted sea views to the Poor Knights Islands but that was not adequately shown. Advertisements referredto "elevated views from Dolphin Place" but said nothing about views from the property. One photograph showed a view out to sea, but that view is not uninterrupted. The photograph was taken on a cloudy day.(f) The agent referred to some purchasers expressing a concern about asbestos. That concern should have been addressed. It apparently was not.(g) Mrs Ward says that she contacted the salesman to express her concerns about this. The explanation he gave was that this was amarketing ploy to get people through the door, and the photographs would be replaced at some point. They were not, however.(h) The agent referred to some purchasers expressing a concern about asbestos. That concern should have been addressed. It apparently was not.[58] The land agent's marketing analysis describes the property as "in a shockingstate" and "unfit for habitation". Mrs Ward says that that is a gross exaggeration, intended to undervalue the property. On the Wards' case the property was unkempt,but the house was habitable. They note that purchasers have not undertaken any significant renovations since taking title.[59] I cannot dismiss these contentions out of hand. In so far as there aredifferences between the Wards and the bank's witnesses on matters of fact, I cannotresolve them in this application.[60] In response, the salesman makes the point that he has a duty not tomisrepresent the property. Even so, on the Wards' account this property had astrong selling feature, the extensive sea views. The advertising, both graphic and written, arguably does not make enough of this. For the Wards, it is arguable that this feature could be promoted more extensively without risking misrepresentation. The general impression conveyed by the advertisements is that the section and its buildings were generally not very attractive.[61] It is arguable for the Wards that the real estate agent could have done better in marketing the property and, with more attractive advertising, more people may have followed up. It is arguable for the Wards that because the advertising was less than adequate, reasonable care was not taken to get the best price reasonably obtainable at the time of sale. The bank has not shown that the Wards do not have a defence under s 176.[62] This aspect does not give the Wards a complete defence to the claim. The best that the Wards could hope to prove in a defended hearing is that the propertymight otherwise have sold for a higher price than was obtained at the auction. But it is not reasonably arguable that the property would have sold for more than the market value assessed by the registered valuer - $390,000. The most that the Wards can hope for is to reduce the bank's claim by $33,000, the difference between theactual sale price of $357,000 and the assessed market value of $390,000.Mr Ward's attempt to recover chattels from the property[63] Mr Ward says that on 15 October 2013, he visited the Dolphin Place property to collect a number of personal possessions. The bank had advised him that the completion date for the sale was 17 October. At the property he was prevented from entry by security personnel who advised him that the property had already been sold and he would not be allowed access. According to Mr Ward, the security people said that they had been instructed by the bank. He asked the security people if they would accompany him as he collected his property, but they refused.[64] The bank says that it did not appoint the security guard. The purchasers did.The purchasers' solicitors advised them of that. Email correspondence put inevidence by the bank shows that the purchasers would not allow the Wards further access to the property to collect their property or for any other purpose whatsoever. The reason given by the purchasers was that the Wards had allegedly taken other fixtures.[65] Mrs Ward refers to a letter of the bank dated 11 April 2014 as implicating it:15 October 2013 Security was placed on the property by the purchaser with our approval to prevent further removal of chattels.[66] The mortgage over the Dolphin Place property was a mortgage of realty only. The Wards did not give the bank security over personal property. The Wards remained entitled to possession of their chattels. That includes a right of recaption.14That right may include the right to enter onto property to take possession of the14 Cynthia Hawes "Interference with Goods" in Stephen Todd (ed) The Law of Torts in NewZealand (6th ed, Brookers, Wellington, 2013) 595 at [12.6].chattels.15 The actions of the security guards in denying Mr Ward access to the property to take possession of his chattels were arguably conversion. The purchasers appear to have arranged for the security guards to be on site for that very purpose. The bank also approved it. The bank's approval was required, because the bank had possession of the property. It had taken possession for the purpose of sale. In the course of arranging the sale, it authorised entry onto the property (by the land agent and interested purchasers). That control of entry onto the property was the exercise of a power of possession. Having authorised the security guards to go onto the property for the purpose of preventing Mr Ward recovering his personal property, the bank is arguably also a joint tortfeasor with the purchasers and the security guard. For the Wards the matter is arguably within the principle stated by Lord Toulson inFish & Fish Ltd v Sea Shepherd UK:16To establish accessory liability in tort it is not enough to show that D did acts which facilitated P's commission of the tort. D will be jointly liable with P if they combined to do or secure the doing of acts which constituted a tort. This requires proof of two elements. D must have acted in a way which furthered the commission of the tort by P; and D must have done so in pursuance of a common design to do or secure the doing of the acts which constituted the tort. I do not consider it necessary or desirable to gloss the principle further.[67] This matter is not straightforward. The bank accuses the Wards of removing fixtures from the property, property over which the bank did have security. Notwithstanding that, the Wards appear to have an arguable claim against the bank for conversion. There is sufficient connection between the bank's claim against theWards for the shortfall arising out of the sale of the property, and the loss caused to the Wards through the way that the bank carried out that sale, that it would be unjust to allow the bank to recover for its loss without at the same time bringing into account the loss it caused to the Wards. This is accordingly a case for equitable set- off.17 The Wards say that they also intend to make a claim in the Disputes Tribunal. That fixes a ceiling on the claim. The tribunal cannot hear claims in tort for more than $15,000 (unless extended by agreement).18 The Wards' claim against the bankfor conversion cannot be for more than that sum. The bank has not shown that the Wards do not have an arguable defence based on the alleged conversion.15 Bill Atkin "Trespassing on Land" in Stephen Todd (ed) The Law of Torts in New Zealand (6th ed, Brookers, Wellington, 2013) 467 at [92.06(3)]..Above at 9.2(3).16 Fish & Fish Ltd v Sea Shepherd UK [2015] UKSC 10, [2015] AC 1229 at [21].17 Grant v NZMC Ltd [1989] 1 NZLR 8 (CA) at 12-13.18 Disputes Tribunals Act 1988, ss 10 and 13.Result[68] The Wards' arguable defence for breach of s 176 of the Property Law Act can give rise to a reduction in liability of no more than $33,000. The claim for conversion of chattels is for no more than $15,000. The bank has not shown that the Wards do not have defences to its claim to the extent of the total sum of $48,000. Inall other respects, I am satisfied that the Wards do not have any defence to the bank'sclaim. The bank is accordingly entitled to judgment for the amount remaining outstanding under all the loans on settlement of the sale of the Dolphin Place property - $271,046.06 but with an allowance of $48,000, leaving a judgment sum of $223,046.06. The bank has claimed interest from 17 October 2013 at five per cent under s 87 of the Judicature Act 1908. It does not make a claim for contractual interest. There is no reason for not awarding the interest claimed.[69] As for the claim for $48,000, the bank is entitled to continue the case through to a hearing to test the Wards' defences. As the amount of the claim is within the jurisdiction of the District Court, the parties may consider transferring the proceeding to that court.[70] I make these orders:(a) The bank recovers summary judgment against the Wards for the sum of $223,046.06 plus interest on that sum of five per cent from 17 October 2013 to the date of judgment.(b) The case will be called in the summary judgment list on Wednesday 3 February 2016 for directions to be given for the continuation of the part of the claim for which I have not given judgment.[71] The bank sought costs of $14,129.00 plus disbursements of $1,725.45. While it has not obtained all the relief it sought, it has succeeded substantially and is accordingly entitled to costs. Its calculation of costs on a 2B basis is generally in order, except for the claim of one day for hearing time. The hearing took only a half day. The costs are adjusted accordingly. The Wards are to pay the bank costs of $13,134 plus disbursements of $1,725.45, a total of $14,859.45...Associate Judge R M Bell