ASB BANK LIMITED V PI ANDERSON HC CHCH CIV-2009-409-2522

ASB BANK LIMITED V PI ANDERSON HC CHCH CIV-2009-409-2522 24 March 2010IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY CIV-2009-409-2522BETWEEN ASB BANK LIMITED Plaintiff AND PAMELA ISOBEL ANDERSON Defendant Hearing: 11 March 2010 Appearances: S. Barker - Counsel for Plaintiff D. Russ - Counsel for Defendant Judgment: 24 March 2010 at 4.00 pmJUDGMENT OF ASSOCIATE JUDGE D.I. GENDALLThis judgment was delivered by Associate Judge Gendall on 24 March 2010 at 4.00 pm pursuant to r 11.5 of the High Court Rules.Solicitors: Buddle Findlay, Solicitors, PO Box 1433, Auckland Fletcher Vautier Moore, Solicitors, PO Box 90, NelsonIntroduction[1] The plaintiff seeks an order for summary judgment for the balance of an unpaid loan owing to it by the defendant. As the defendant's mortgagee, the plaintiff exercised its power of sale over secured properties owned by the defendant or her interests. However, the proceeds from these sales were insufficient to discharge all of the debt. [2] The defendant does not dispute that she is liable under the loan agreement entered into with the plaintiff, but opposes the present application on the sole basis that the plaintiff did not take reasonable care to obtain the best price reasonably obtainable when exercising its power of sale of the properties it held as security under s 176 Property Law Act 2007. [3] The defendant had also initially alleged that the plaintiff's conduct in exercising its power of sale was unconscionable or oppressive, but this ground of opposition has now been abandoned.Background[4] On 18 September 2007, the plaintiff made available a term loan of $735,000 to the defendant as trustee for the Pamela Anderson Education Trust. The loan agreement signed to record this facility was for a term of 30 years from the date of drawdown. It was secured by registered mortgages over several properties: a property situated at 19-21 Lachlan Place, Timaru (the Timaru property) and a property at 2 and 2A Harewood Road, Oxford (the Oxford property). [5] The Oxford property consisted of two separate and legally defined parcels of land contained in individual certificates of title. There was an original dwelling on 2 Harewood Road, and a relocated dwelling on 2A Harewood Road. Resource consent for relocation of the second dwelling had been granted. However, the existing boundary line between the two adjoining titles ran through the carport and sleep-out of the original dwelling. [6] In October 2008, the defendant failed to pay the monthly instalment due under the agreement. On 17 December 2008, the plaintiff wrote to the defendant demanding payment of the outstanding amount, but the defendant failed to comply with that demand. The plaintiff then served notices on the defendant under s 119 of the Property Law Act 2007,requiring that the defaults be remedied by 25 February 2009 and notifying the defendant that the plaintiff would have the right to enter into possession of and sell the properties. [7] When the notices were not complied with on 25 February 2009, the plaintiff arranged for the sale of the properties by auction. The Timaru property was to be sold for $340,000 with a settlement date of 25 June 2009, and the Oxford property was to be sold, as a whole, for $215,000 with a settlement date of 19 June 2009. The defendant does not dispute that the plaintiff took reasonable care in selling the Timaru property. [8] Back-tracking a little, in March 2009 when the plaintiff took steps to advance its mortgagee sale of the Oxford property, it requested a marketing appraisal from Grenadier Real Estate Limited (Grenadier) a Canterbury real estate company which operated under the Harcourts' franchise. Grenadier recommended a sale by public auction following a four- week advertising and marketing campaign. Its market appraisal analysed the value of 2 Harewood Road and 2A Harewood Road together because it said "boundary, title and compliance issues [had] not been satisfied as to Council requirements". An auction date was scheduled for 1 May 2009 and the campaign, which was reasonably extensive, commenced. [9] On 27 April 2009, the plaintiff obtained an independent valuation report from registered valuers, Fordbaker Valuation Limited (Fordbaker), which concluded that, sold as one property, the Oxford property had a current market value of $265,000 and at, a forced sale, a value of $200,000. The valuation identified consent issues with the carport associated with 2 Harewood Road, and further noted that there would be a number of rectification costs if 2 Harewood Road and 2A Harewood Road were to be sold as separate properties, as... the fence dividing the two dwellings is not located on the boundary of the property, with the studio associated with 2 Harewood Road appearing to be located on the parcel of land associated with 2A Harewood Road.Those rectification costs were estimated to total about $75,000. [10] Six interested buyers had registered to bid at the first auction on 1 May 2009. Prior to this auction the plaintiff and the defendant had entered into negotiations. At the defendant's request, the 1 May 2009 auction was postponed the plaintiff granting the defendant additional time to arrange refinancing. It relisted the property for mortgagee sale however when the defendant's refinancing proposals failed to reach a conclusion.[11] A second auction was scheduled for 5 June 2009. Only three bidders registered for this auction. At the auction, bids opened at $150,000 with the highest bid received being $180,000, and the property was passed in. However, negotiation efforts following the auction resulted in an improved offer of $215,000 from the highest bidders. The plaintiff accepted this offer and the sale settled on 19 June 2009. [12] The net proceeds realised upon settlement of the sale of the properties were applied in reduction of the outstanding balance of the amount owing under the loan agreement. This left a total of $317,274.57 plus interest owing by the defendant as at 30 June 2009. According to the plaintiff, it was when the defendant failed to submit a proposal to settle the shortfall, that the plaintiff on 27 October 2009 brought these proceedings. [13] Then, on 15 December 2009, the defendant obtained a valuation of the Oxford property from Burnett & Associates This assessed the June 2009 value of each adjusted Lot for 2 and 2A Harewood Road on a separate basis as being $230,000 and $210,000. The defendant also went on to seek a review of Fordbaker's valuation from a Mr Tappenden, a registered valuer at TelferYoung (Canterbury) Limited. Mr Tappenden has provided a report which expresses the view that the lots had a value of between $165,000 and $220,000 each, had they been sold separately. Mr Tappenden's valuation is not, however, a formal registered valuation.Summary Judgment Principles[14] The present summary judgment application is brought pursuant to r 12.2(1) of the High Court Rules which provides:12.2 Judgment when there is no defence or when no cause of action can succeed(1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.[15] The principles of summary judgment have been recently summarised by the Court of Appeal in Krukziener v Hanover Finance Ltd [2008] NZCA 187:[26] The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1; (1986) 1 PRNZ 183 (CA), at p 3; p 185. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if theapplication 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 Mee Yong v Letchumanan[1980] AC 331; [1979] 3 WLR 373 (PC), at p 341; p 381. In the end the Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd vPatel (1987) 1 PRNZ 84 (CA).Did the Plaintiff Breach its Duty of Care?[16] The sole issue for the Court to determine in this case is whether the plaintiff breached its duty of care owed to the defendant under s 176 Property Law Act 2007 in relation to the mortgagee sale of the Oxford property. More particularly, the question is whether or not the plaintiff's decision to proceed with a combined sale of the lots was appropriate in all the circumstances. To succeed in its present application, the plaintiff must satisfy the Court that there is no real prospect of a successful defence under s 176. [17] Section 176 Property Law Act 2007 provides that a mortgagee who exercises a power of sale owes the following duty: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.[18] In Public Trust v Ottow HC Auckland CIV-2009-404-3825, 4 November 2009 at [17], Asher J provides a useful summary of the principles applicable to a mortgagee's duty of care under s 176:(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: Raja (Administratrix of the Estate of Raja (dec'd)) v Austin Gray (a firm) [2002] EWCA Civ 1965 at [55], per Peter Gibson LJ; Silven Properties v Royal Bank of Scotland [2004] 1 WLR 997 at [14]. (b) The mortgagee's duty of care is to take reasonable care to obtain the best price reasonably obtainable at the time of sale: Agio Trustees Co Ltd v Harts Contributory Mortgages Nominee Co Ltd (2001) 4 NZ ConvC 193,480 (HC). (c) It does not matter that the time may be unpropitious and that by waiting a higher price could be obtained: Tse Kwong Lam v Wong Chit Sen [1983] 1 WLR 1349 at 1355 B; Silven Properties v Royal Bank of Scotland at [14]. (d) A mortgagee is under no obligation to improve the property or increase its value: Silven Properties v Royal Bank of Scotland at [16]. (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: Moritzson Properties Ltd v McLachlan (2001) 9 NZCLC 262,448 at [61]. (f) A mortgagee does not have any general duty to maintain properties prior to sale: Silven Properties v Royal Bank of Scotland at [16]. (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: G Merel & Co Ltd v Barclays Bank (1963) 1 SJ 542. (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: see Palk v Mortgage Services Funding Plc [1993] 1 Ch 330 at 337–8. (i) Proper care must be taken to expose the property to the market and to obtain the best price reasonably obtainable: Harts Contributory Mortgages Nominee Co Ltd v Bryers HC AK CP403-IM00 19 December 2001 at [43](d) and (f).[19] Asher J then set out the following recommended steps as an indication of whether a mortgagee can be considered to have made reasonable efforts to obtain the best reasonably obtainable price (at [31]):(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.[20] The plaintiff says that these criteria are essentially designed to determine whether a mortgagee followed proper process under s 176, and that in the present case, it met each of these criteria in selling the defendant's properties. It contends that it acted appropriately in seeking recommendations from an experienced professional real estate agent as to the appropriate methodology and marketing for sale of the Oxford property, and that Grenadier provided thorough and considered advice on how to best proceed with the sale. The plaintiff accepted that advice, and the property was marketed extensively for sale over a four-week period. Following the relisting on 19 May 2009, the property was marketed for an additionaltwo weeks and, according to the plaintiff, a good level of interest was generated. Finally, the plaintiff agreed to sell the Oxford property only when the highest bidders at the auction increased their offer by a further $35,000 to the final price of $215,000.00. [21] In these circumstances, the plaintiff submits that this sale price of $215,000 was the best price able to be achieved on the open market at the time of sale. It accepts that the "best price reasonably obtainable at the time of sale" will often equate to the current market value of the property, but refers to Westpac Banking Corporation v Chisholm HC Auckland CIV- 2006-404-3230, 27 April 2007, where the Court affirmed that sale of a property at forced sale value did not mean that the mortgagee had breached its duty. In that case, Associate Judge Doogue noted specifically:[19] To what degree the property will be marked down because of a forced sale is a matter of fact in each case. But what I have said so far makes it clear that the failure to achieve the assessed market value of the property on a mortgagee sale does not necessarily give rise to an inference that the mortgagee has breached his/her duty to take reasonable care to obtain the best price reasonably obtainable as at the date of sale. ... ... and [27] The defendant attempted to show that there was a sale at such gross undervalue as to give rise to a suspicion that the mortgagee breached its duty. But all he has established is that there was a sale at less than the market value as the valuers assessed it to be. Realisation of the price at a discount to market value on its own proves nothing. Such a discount is exactly what one would expect where a forced sale takes place. There is no evidence that the degree of discount to market value that the valuers estimated was so great as to go beyond the normally expected level of reduction in the sale price.[22] Before me counsel for the plaintiff also submitted that s 176 is "process focussed" and that the Court is required to examine the sale process itself. Hence, he argued that, because the plaintiff here acted on the basis of sound professional advice provided to it, there are no grounds for the defendant to "second guess" the sales process adopted or to speculate on potential different outcomes. Counsel referred to the Fordbaker valuation, which noted that there would be a number of rectification costs should the properties be sold separately, and to the real estate agent's market appraisal which analysed the value of the lots together because "boundary, title and compliance issues [had] not been satisfied as to Council requirements". [23] In response, the defendant's argument centres on the question of whether the property could have been sold separately without any, or with merely minimal, effort, thus achieving a higher price. Before embarking on a consideration of the substance of thedefendant's case, therefore, I must address the issue raised by the plaintiff whether it was not simply entitled to rely on the advice that it received from experienced and qualified valuers and real estate agents, regardless of whether the property could have been sold more profitably in a different way. In other words, did the plaintiff fulfil its duty of reasonable care by virtue of adopting a sale method that had been recommended to it by competent professionals, or is the duty not only defined by the process that is followed by the mortgagee, but also by the substantive decisions that are made in selling the property? [24] In Harts Contributory Mortgages Nominee Company Limited v Bryers HC Auckland CP403-IM00, 19 December 2001 at 14, the Court considered that:[a]ppointing a competent agent to sell does not discharge the mortgagee's duties, but since its duty is ultimately one of reasonable care, putting the matter in the hands of a competent agent will usually go a long way towards discharging the mortgagee's duties.[25] However, "putting the matter in the hands of a competent agent" will not absolve the mortgagee from liability where the agent did not use reasonable care, as the mortgagee will be responsible for the agents employed in connection with the sale: see Cuckmere Brick Company Ltd v Mutual Finance Ltd [1971] 1 Ch 949; Raja v Austin Gray (A Firm) [2002] EWCA Civ 1965 at [31]; E H Burn and J Cartwright (ed) Cheshire and Burn's Modern Law of Real Property (17 th ed, Oxford University Press, 2006) at 773. It follows that, where the price is lower than would have been the case due to a failure by a mortgagee's agent to take reasonable care, the mortgagee may well be liable to the mortgagor. It would be wrong, in my view, therefore, to perceive the mortgagee's duty as one of mere "process", as was suggested by the plaintiff. A mortgagee's duty of reasonable care is not fulfilled simply by instructing a competent agent. [26] I turn now to the issue of whether the Oxford property could have been sold in two lots and, if so, whether the plaintiff may have breached its duty of reasonable care in failing to do so. On this, the defendant argues that there is conflicting evidence whether the lots could have been sold on a separate basis as they were, or whether the plaintiff would have been required to take more than minor steps to make a separate sale possible. The plaintiff, on the other hand, submits that the evidence shows quite clearly that considerable work was needed to turn the two lots into saleable separate properties and to advertise and sell them as such, and contends that a mortgagee is entitled to sell the property "as is".[27] There is evidence for the plaintiff from Mr Naylor, who is a Director of the valuers Fordbaker, that the costs of selling the Oxford lots as two properties would have been considerable. It is accepted that a boundary adjustment would have needed to be undertaken. The boundary extended through the carport and sleep-out of 2 Harewood Road. Mr Naylor's estimate of these costs in his evidence is $75,000, including legal, survey and other professional fees and holdings costs. [28] Similarly, Mr Gillard, who is the branch manager of Grenadier, says that the cost in creating two separate complying certificates of title to enable 2 and 2A Harewood Road to be sold separately would have been more than minimal. He says that he spoke to the officers at the local authority concerned, the Waimakariri District Council at the time of the appraisal, who informed him of the boundary line issue. In addition, he deposes that he was told that the original dwelling and land area for 2 Harewood Road did not comply with the minimum site requirements of 600 m² imposed by the Waimakariri District Plan. Mr Gillard is of the view that it would have taken four to eight months to complete the process of creating two separate certificates of title through boundary adjustment while still complying with the minimum site requirements, and that this process would have required a resource consent for subdivision and a formal survey plan and pegging of the properties. In addition, Mr Gillard notes that the relocated dwelling did not have a code of compliance certificate and had not been inspected by the local authority's building inspectors. Given timeline, costs and funding issues to rectify these shortcomings, Mr Gillard says that it was never considered a practical option for the properties to be disposed of individually as two separate legal entities. [29] In response, the defendant argues that Mr Gillard was not qualified to make such an assessment, and that Fordbaker failed to give any real consideration as to whether its valuation methodology was appropriate, simply having been instructed to consider the combined value of the lots. She has provided valuations by Burnett & Associates which indicate a value that is in excess of twice the sum at which the properties were in fact sold. Mr Burnett undertook a valuation of the properties in August 2007 and was of the view that the property at 2 Harewood Road had a value then of $245,000 and the property at 2A Harewood Road a value of $255,000. Revised valuations as at June 2009 put the market values at $230,000 and $210,000 respectively. [30] On the basis of that evidence, the defendant argues that there was a failure to take reasonable care by the plaintiff, as the sale price was "much less than the assessed value" and there was "no explanation for the discrepancy": Public Trust v Ottow at [31]. Shemaintains (although there is no verifying evidence before me of this) that, contrary to Mr Gillard's evidence, the property boundaries had been formally surveyed and pegged, and she says there would have been no or merely minimal costs involved in selling the lots separately. She accepts, however, that a code compliance certificate had not yet been issued for the relocated dwelling, but argues that this would not have prevented a sale of the lots as separate properties. [31] The defendant has adduced evidence by Mr John Tappenden, a valuer, who believes that there was no impediment to the properties being sold on an individual basis. Mr Tappenden places a valuation of between $165,000 to $220,000 on each property if sold individually, with the lower range coming closer to a forced sale price. He argues that the substantial disparity between the Burnett & Associates and Fordbaker valuations results from Fordbaker's valuation of the properties as a combined unit. To the extent that Fordbaker did take account of the properties' individual values, Mr Tappenden thinks that the valuation is arbitrary and fails to point to any underlying justification for deducting $75,000 of costs. He is of the opinion that, assuming the relevant survey had been carried out, very little may have been required to "separate out" the properties. [32] It must be noted that Mr Tappenden's affidavit does not appear to address the issue of the suggested minimum site requirement in Oxford of 600 m². Mr Tappenden acknowledges that a separate sale would have necessitated a boundary adjustment to be undertaken, but as I have noted he considers that the costs involved would not have been substantial. It appears uncontroverted, therefore, that separate sales of 2 and 2A Harewood Road could not have proceeded on an "as is" basis, but that they would have required the plaintiff to resolve the encroachment issue and possibly also the minimum size requirement. I say this notwithstanding that there appears to be some dispute here as to whether the parcels of land had been formally surveyed and pegged. [33] Irrespective, the plaintiff also submits that it is significant that Mr Tappenden acknowledges there would be some costs involved in selling the properties separately. It refers to Silven Properties Ltd v Royal Bank of Scotland Plc [2004] 1 WLR 997 as authority for the proposition that no mortgagee has an obligation to spend money to improve a property and is entitled to sell that property "as is":[16] The mortgagee is entitled to sell the mortgaged property as it is. He is under no obligation to improve it or increase its value ...[17] The mortgagee is free (in his own interest as well as that of the mortgagor) to investigate whether and how he can "unlock" the potential for an increase in value of the property mortgaged (eg by an application for planning permission or the grant of a lease) and indeed (going further) he can proceed with such an application or grant. But he is likewise free at any time to halt his efforts and proceed instead immediately with a sale. ... ... [20] In our judgment there can accordingly be no duty on the part of a mortgagee, as suggested by the Claimants, to postpone exercising the power of sale until after the further pursuit (let alone the outcome) of an application for planning permission or the grant of a lease of the mortgaged property, though the outcome of the application and the effect of the grant of the lease may be to increase the market value of the mortgaged property and price obtained on sale. A mortgagee is entitled to sell the property in the condition in which it stands without investing money or time in increasing its likely sale value. ...[34] As such, the plaintiff argues that any notion that it should have postponed the sale and spent money on the property falls outside its duty as mortgagee. Silven Properties Ltd v Royal Bank of Scotland Plc. This also was adopted in Public Trust v Ottow at [17]. [35] In addition, the plaintiff refers to Mullen v Rodney District Council HC Auckland CP31/SD00, 22 April 2002, where the plaintiff applied for joinder of a mortgagee as a defendant on the basis that the mortgagee could have achieved subdivision of the property into two lots, and that in failing to consider a sale of the property as two lots the mortgagee failed in its duty to take reasonable care to obtain the best reasonably obtainable price at the time of the sale. The Court there referred to the principle that, as a matter of law, a mortgagee is entitled to make its own commercial decisions about whether, and if so at what time, to sell mortgaged property. The decision of how to sell was to be approached in the same way (at [44]). The property in this case had been subdivided, but issue of two certificates required completion of a concrete driveway, a reserve contribution of $8000 and other fees. The Court did consider in that case, however, that the plaintiff had a tenable cause of action, albeit a "relatively weak one", because the plaintiff would find it difficult to contradict the defendant's factual material at trial (at [47]). [36] The defendant submits that the plaintiff is wrong to suggest that a mortgagee need not pay any money or take any steps to obtain a higher price in the right circumstances. She refers to Nathan Securities Ltd v Stavefield Holdings No 29 Ltd CA 6/93, 1 July 1993 at 15, where the issue was whether the mortgagee should have enabled requirements for the execution of a lease to be completed before selling the property. The Court of Appeal in that case held that the mortgagee could not be criticised for its decision to sell 30 days after taking possession, but was obliged to have regard to the true nature of the asset:The asset was not an empty building, but one purpose-built for a long-term lessee which was anxious to go into possession. The impediments to that, and to the title to the securities being put in order, had been all but overcome. We consider that Nathan's obligation of good faith required them to facilitate completion of the few outstanding matters, so that the true value of the asset was established. This would not have delayed their contemplated marketing of the property after 30 days. By that time any matter outstanding could not have been of great consequence.[37] As noted by the plaintiff, however, the circumstances in that case were materially different from the present situation, as the mortgagee in Nathan Securities had previously made a commitment to expend money (at 14-15):[Counsel] pointed out that there is no authority for requiring a mortgagee to expend further money as part of its duty to achieve a fair price. But here there was a very unusual situation. Nathans had agreed to make the advance and had confirmed their willingness to make it, as part of an entirely realistic solution, only four days earlier. It was not so much a matter of putting up further funds as of honouring an existing commitment ... In the particular circumstances we do not think that the need for further funding entitled Nathans to act as they did.[38] The authorities clearly establish that there is no obligation on a mortgage to postpone a sale in the hope of a better price. It has also been held that a mortgagee is not required to break up assets and sell them in a piecemeal manner if this can only be carried out over a substantial period: Harts Contributory Mortgages Nominee Company Limited at 15, referring to TSE Kwong Lam v Wang Chit Sen [1983] 1 WLR 1349. Moreover, a mortgagee has no general duty to improve the value of the property before exercising its power of sale: Public Trust v Lum HC Auckland CIV-2009-404-2788, 7 September 2009 at [23]. [39] The defendant in the present case submits that this is a clear situation where a sale at a discounted level gives rise to a reasonable inference that the mortgagee has breached its duty under s 176. She argues that the price obtained by the plaintiff cannot in any way be reconciled with the valuations of Mr Burnett and Mr Tappenden, and that there is no clear evidence before the Court as to why the properties were sold on a combined basis. I disagree. In my view a robust and realistic approach is required here – Bilbie Dymock Corporation Limited v Patel (1987) 1 PRNZ 84 (CA). The evidence before the Court clearly indicates that there would have been delay in a sale and the plaintiff would have had to expend more than minimal efforts and significant moneys to sell the lots separately even if it was able to do so.[40] Although I remind myself that the application before me is one for summary judgment, it is my view that the plaintiff's application here must succeed. Following Silven Properties Ltd v Royal Bank of Scotland, a mortgagee is not under any duty to postpone exercising the power of sale "until after the further pursuit ... of an application for planning permission or the grant of a lease" (at [20]). By analogy, I consider that a mortgagee in the position of the plaintiff here is not obliged to postpone the sale of the property in order to obtain boundary adjustments. The mortgagee is entitled to sell the property in the condition in which it stands without investing money or time – Silven Properties, adopted in Ottow. And, as I have noted above, in TSE Kwong Lam v Wang Chit Sen the Court considered that a mortgagee was not required to break up assets if this could only be carried out over asubstantial period. Finally, in my view this is an entirely different situation from the one that prevailed in Mullen v Rodney District Council where a subdivision had been approved and the Court thought that the plaintiff may have a tenable cause of action although completion of final subdivision steps would have required completion of a drive-way and payment of a determined reserve contribution and certain established fees. [41] It is necessary also to briefly refer here to the plaintiff's argument that in any event it would not have been possible to sell the lots as separate properties, given that s 75 Building Act 2004 requires that allotments be sold together if a building is constructed on land that is comprised of more than one allotment. The defendant does not dispute that the carport and the sleep-out were built over the boundary of 2A Harewood Road, but submits that s 75 has no application here, as this is not a case involving an application for a project information memorandum or a building consent. Section 75 provides:75 Construction of building on 2 or more allotments(1) This section applies if— (a) an application for a project information memorandum [or for a building consent] relates to the construction of a building on land that is comprised, or partly comprised, of 2 or more allotments of 1 or more existing subdivisions (whether comprised in the same certificate of title or not); and (b) those allotments are held by the owner in fee simple.[(2) The territorial authority must issue a certificate that states that, as a condition of the grant of a building consent for the building work to which the application relates, 1 or more of those allotments specified by the territorial authority (thespecified allotments) must not be transferred or leased except in conjunction with any specified other or others of those allotments.][42] While I agree with the defendant that s 75 is merely concerned with applications for project information memoranda and building consents, and does not itself impose a bar on the transfer of land on which a building encroaches, the section must of course be understood as ancillary to the wider point that any encroachment emanating from one allotment over another would have to be removed before they could be sold as two separate properties. The defendant, here clearly acknowledges that 2 and 2A Harewood Road could not have been sold individually without the necessary boundary adjustments. [43] Accordingly, I conclude that the plaintiff did not breach its duty of reasonable care in proceeding with a combined sale of the property. I accept the plaintiff's submission that the plaintiff here acted on the basis of sound professional advice provided to it. This included an extensive marketing campaign designed by a real estate agency with the appropriate expertise and experience in such matters. An orthodox and transparent sales process (a public auction) was chosen. The defendant was no doubt aware of the proposal to auction the properties together and the initial auction date was postponed at her request to enable a possible refinancing to be pursued. The plaintiff ultimately sold to the highest offeror but only after the property had been passed in at auction, and that highest bidder then negotiated up to a higher price. It should not be forgotten that, in the absence of bad faith, the mortgagee shares with the mortgagor an incentive to maximise the price obtained, as it will want to recover all of its advances: Agio Trustees Co Ltd v Harts Contributory Mortgages Nominee Co Ltd (2001) 4 NZ ConvC 193, 480 at [43]. It was in the plaintiff's interest to get the highest price it could reasonably achieve at the time of sale, as the defendant owed it a significant amount of money. However, the plaintiff after obtaining professional advice, (which included the Fordbaker opinion in its 27 April 2009 valuation that selling on a separate title basis would still only result in a maximum market value of $265,000.00) took the view that expending further time and resources to perhaps increase the value of the property by selling it in two lots was not desirable in the circumstances, and, in the plaintiff's position, this view was a wholly legitimate one to take. The defendant here has failed to provide sufficient evidence to cast any real doubt on this approach and thus to meet the threshold of a valid defence. I am left without any real doubt or uncertainty here that the plaintiff took reasonable care in selling the property in accordance with s 176. [44] In conclusion, I note briefly that Mr Naylor and Mr Tappenden are very critical of their respective valuations. Mr Naylor says that there would have had to be considerable internal upgrading to achieve Mr Tappenden's levels of value and is concerned that Mr Tappenden's valuation is based on an internal inspection that dates back to 2006. For hispart, Mr Tappenden criticises the Fordbaker valuation on the basis that it was reached by comparison with non-comparable properties. [45] I express no views as to the quality or the reliability of the valuations with respect to these criticisms. The present application did not proceed on the basis that the plaintiff could not have obtained a higher sales price if the property had been sold separately, or that the plaintiff's "combined" valuation of the property was too low or inadequate, but is confined to the question of whether a separate sale could have occurred without or with only minimal expense.Conclusion[46] The plaintiff's application for summary judgment has succeeded. [47] Summary judgment is now granted to the plaintiff against the defendant in the sum of $317,274.57 claimed in the plaintiff's statement of claim together with interest on this sum at 22.5% per annum from 30 June 2009 to the date of hearing 11 March 2010 totalling $49,677.32 (calculated at a daily rate of $195.58 for 254 days). [48] In addition, in terms of the Loan and Facility Agreement between the parties, the plaintiff is entitled to solicitor/client costs against the defendant on this application which I award in the sum of $16,180.14 and disbursements in the sum of $1,449.35.'Associate Judge D.I. Gendall'