BANK OF NEW ZEALAND V D J RAHUI AND ANOR HC AK CIV 2009-488-000254

BANK OF NEW ZEALAND V D J RAHUI AND ANOR HC AK CIV 2009-488-000254 1 July 2009IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2009-488-000254BETWEEN BANK OF NEW ZEALAND Plaintiff AND DAMIAN JON RAHUI First Defendant AND ARIANA MARIE RAHUI Second Defendant Hearing: 1 July 2009 Appearances: S Henderson for Plaintiff Judgment: 1 July 2009ORAL JUDGMENT OF ASSOCIATE JUDGE ROBINSONSolicitors: Buddle Findlay, PO Box 2694, Wellington 6140[1] The Bank applies by way of summary judgment for the amounts claimed by the Bank as due and owing by the two defendants in respect of loans made by the Bank to their company, Coastal Property Trustees Limited. [2] There are in fact three separate loans. The first is an advance of $460,500 which is secured by way of mortgage over a property at 28 Kotanui Avenue, Army Bay, Whangaparaoa. In terms of that advance, interest is payable at an agreed annual interest rate of 7.69% p.a. for a two year fixed rate period. The agreement provides for a customer margin to be added to that rate which is fixed at 0% p.a. The agreement goes on to provide that from the end of that period the agreed annual interest rate will be the Bank's then prevailing standard rate for standard housing loans, plus such customer margin. The prevailing standard interest rate without the customer margin is ascertained by contacting any of the Bank's branches or visiting www.bnz.co.nz. [3] The second loan secures an advance of $79,500. It is also secured by way of mortgage over the property at 28 Kotanui Avenue, Whangaparaoa. The agreed annual interest rate for the first two years is 8.10% p.a. From the end of that period, the agreed annual interest rate is to be the then prevailing standard rate for standard housing loans, plus a customer margin of 0% p.a. Once again, the agreement provides for the way in which the customer can ascertain the then prevailing Bank interest rate. [4] The final advance was made on 24 May 2007 and is for $40,000 as a housing loan. The agreed annual interest rate is fixed at 9.55% p.a. This is the prevailing standard rate for standard housing loans currently 10.05% p.a. less a customer margin of 0.5% p.a. [5] Those advances totalling $580,000 were personally guaranteed by the two defendants. Because the company was in default, the Bank issued notices under the Property Law Act and eventually arranged for the sale of the property by mortgagee sale. The property was sold at auction on 6 March 2009. According to the statement of claim, the amount received from the sale of the property was $475,000. Settlement of the sale occurred on 25 March 2009 and the net sale proceeds of$395,476.14 were applied by the Bank in reduction of the total debt owed to the Bank. Thus the difference between the sale price of $475,000 and net proceeds available $395,476.14, namely $79,524, appears to have been applied towards the costs of the sale, which will, of course include commissions and auction expenses. No evidence is provided of those costs and expenses. [6] In the circumstances, I consider the plaintiff should provide some evidence as to how the difference between the sale price and the proceeds of the sale were applied. Similarly, the Bank, if it achieves full payment of the amount of the judgment it seeks, will have received a total of $633,062 in repayment of advances of $580,000. It may very well be that the difference is made up of interest and costs but once again I consider the Bank should provide full details of how that amount is made up so that the Court is aware of the amount that is being applied in interest and the amount that is being applied in costs. [7] Finally, evidence today establishes that the first loan carried interest at 9.69% for 12 months from the date of the expiry of the loan in May 2008. However, a significant portion of that loan was repaid from the proceeds of the sale of the property. The question arises as to how the Bank is entitled to continue to charge interest at 9.69% p.a. and in particular whether it is an appropriate rate of interest from May 2009, having regard to the current interest rates that the Bank charges for those sort of advances. [8] In the circumstances, therefore, I will stand this matter down and invite counsel to submit a memorandum with evidence to justify the expenses, costs and interest that the Bank appears to be charging in respect of these loans. I invite counsel to submit a memorandum, together with supporting evidence in the form of an affidavit which can produce the accounts and settlement statements so that I can give further consideration to the amount for which judgment should be entered. ______________________ MD Robinson Associate Judge