ROBERTSON & ANOR v ASB BANK LIMITED CA616/2013 [2014] NZCA 597

ROBERTSON & ANOR v ASB BANK LIMITED CA616/2013 [2014] NZCA 597 [5 December 2014]IN THE COURT OF APPEAL OF NEW ZEALANDCA616/2013[2014] NZCA 597BETWEEN CANDACE ANN ROBERTSONFirst AppellantROSS ARTHUR ROBERTSONSecond AppellantAND ASB BANK LIMITEDRespondentHearing: 23 October 2014Court: Miller, Heath and Dobson JJCounsel: Appellants in personNFD Moffatt and O F Newman for RespondentJudgment: 5 December 2014 at 12.45 pmJUDGMENT OF THE COURTA The appeal is allowed.B The orders dismissing the applications made by Mr and Mrs Robertson to set aside bankruptcy notices are quashed. In substitution, orders setting aside each of the bankruptcy notices are made.C The order for costs made in favour of ASB Bank Ltd in the High Court is quashed. In substitution, an order that ASB Bank Ltd pay usual disbursements to Mr and Mrs Robertson is made.D Usual disbursements are awarded in favour of Mr and Mrs Robertson on the appeal.____________________________________________________________________REASONS OF THE COURT(Given by Heath J)TABLE OF CONTENTSThe appeal ................................................................................................................. [1]Background ............................................................................................................... [2]Legal aid considerations .......................................................................................... [6]The applications to set aside the bankruptcy notices .......................................... [12]Legal principles ...................................................................................................... [17](a) Setting aside a bankruptcy notice .............................................................. [17](b) Onus of proof ............................................................................................. [25](c) The duty of a mortgagee exercising a power of sale ................................. [28]The alleged cross claim .......................................................................................... [31](a) The evaluative task .................................................................................... [31](b) The nature of the inquiry ........................................................................... [33](c) February 2011 to October 2011 – the first attempt at a mortgagee sale .. [34](d) October 2011 to April 2012 – the second attempted mortgagee sale ........ [45](e) April 2012 to August 2012 – third attempted mortgagee sale ................... [51]Analysis ................................................................................................................... [56]Result ....................................................................................................................... [60]The appeal[1] Mr and Mrs Robertson appeal against decisions made by Associate Judge Bell, in the High Court at Auckland on 16 August 2013, by which he refused their application to set aside bankruptcy notices1 served under the Insolvency Act 2006.2Background[2] Mr and Mrs Robertson owned a property at 710 Hibiscus Coast Highway, Hatfields Beach north of Auckland. Having borrowed money from ASB Bank Ltd (ASB) in March 2006, they granted a registered first mortgage over the property inASB's favour. The mortgage also secured moneys outstanding from time to time under a later revolving credit facility. By late 2010, that facility was overdrawn.1 The application was made under r 24.10 of the High Court Rules.2 ASB Bank Ltd v Robertson [2013] NZHC 2125 [Bankruptcy notice decision].[3] ASB demanded the outstanding amount. As a result of non-compliance, ASB began to take enforcement proceedings under its mortgage. A notice was issued under s 119 of the Property Law Act 2007, and was served on Mr and Mrs Robertson. The alleged default was not remedied within the requisite time, meaning that the bank was entitled to sell the property in order to satisfy the debt. In 2011 and 2012, real estate agents were engaged to act on behalf of ASB, with a view to selling the property. Although active steps were taken over that time, ASB did not finally sell the property until August 2012.[4] In 2012, ASB commenced summary judgment proceedings against Mr and Mrs Robertson. On 5 July 2012, Toogood J entered judgment for the amount claimed, $1,941,678.3 Although Mr and Mrs Robertson sought to raise a counterclaim based on an alleged breach by ASB of its duty to take reasonable steps to obtain the best available price on sale,4 the Judge declined to consider it because the property had not, at that time, been sold.5[5] The property sold for $1.2 million, in late August 2012. As at 10 April 2013, with accrued interest the amount outstanding (taking into account the sale price of the property) was $811,259.37. On 11 April 2013, bankruptcy notices were issued against both Mr and Mrs Robertson in that sum.Legal aid considerations[6] Mr and Mrs Robertson had sought legal aid to make their applications. As a result of decisions made by the Legal Services Commissioner on 22 April 2013, aid had been refused. They applied to the Legal Aid Tribunal (the Tribunal) to review those decisions. In the meantime, a hearing date of 16 August 2013 was allocated for their applications to set aside the bankruptcy notices.3 ASB Bank Ltd v Robertson [2012] NZHC 1587 [Summary judgment decision].4 Mr and Mrs Robertson's claim was based on ASB's alleged failure to comply with its statutoryduty under s 176 of the Property Law Act 2007 to do that. Mortgagors are one of the classes of persons to whom that duty is owed. Section 176 is set out below at [28].5 At [9].[7] On 13 August 2013, the Tribunal determined that the Commissioner of Legal Services had incorrectly declined aid.6 The Tribunal remitted the decision to the Commissioner, for reconsideration in accordance with its reasoning.7[8] On 15 August 2013, Mr and Mrs Robertson sought an adjournment of the hearing, pending reconsideration of their application for legal aid. Associate JudgeBell was provided with a copy of the Tribunal's decision. The adjournment wasopposed by ASB on the grounds that "as a general rule proceedings should proceed on the date they are set down to be heard" and that the bank wished "to have [the application] determined in a timely way, and there [was] still uncertainty as to the Robertsons' application for legal aid".8[9] Associate Judge Bell declined the adjournment and directed that the application proceed the following day. He said:[5] In short, my reasons are that there is still uncertainty whether the Robertsons will be granted legal aid. The Tribunal simply directed the Commissioner to reconsider the application. These days, it is increasingly harder to obtain legal aid. The courts have got used to hearing cases involving litigants in person who would like to, but cannot, obtain grants of legal aid. The Robertsons are not at a complete disadvantage. The law that applies on applications to set aside a bankruptcy notice on the grounds of a cross-claim is largely not controversial. The Robertsons will need to establish that they have a genuinely triable case for a claim that exceeds the amount for which judgment has been given against them. They will need to show that they have an arguable case under s 176 of the Property Law Act 2007.[6] The bundle of documents prepared by the bank contains copies of relevant legal decisions. The decision in this case is likely to turn largely on factual matters. The Robertsons have already prepared evidence and legal submissions for the hearing. Their evidence is relevant. Their submissions are directed at relevant factual questions. In these circumstances, I am satisfied that Mr Robertson would be able to present the case for himself and his wife without legal representation, and that a fair hearing is possible.[10] Mr and Mrs Robertson advanced their inability to secure legal representation on their applications as a reason for allowing their appeals. While we do not determine the appeal on that basis, we express some surprise with the approach taken by the Associate Judge in declining to adjourn the applications.6 Re Robertson [2013] NZLAT 40.7 At [41].8 ASB Bank Ltd v Robertson HC Auckland CIV-2013-404-1858, 15 August 2013 (Minute) at [3].[11] In our view, the Robertsons ought to have been given time to pursue their application for legal aid because:(a) Although there remained (as the Associate Judge stated) "uncertainty" about whether legal aid would be granted, the Tribunal's decision recognised that Mr and Mrs Robertson's application had not beenproperly considered. Looking at the issue from a different perspective, it could not be said that Mr and Mrs Robertson'sprospects of securing aid were so low as to justify refusal of the adjournment application.(b) Although Judge Bell considered Mr and Mrs Robertson had prepared relevant evidence and submissions for the hearing, that is a view that could only have been formed on the basis of what the Judge knew about the background. With the benefit of legal advice, further relevant evidence might have emerged. Not infrequently, lay litigants do not realise the importance of evidence that has not been put before the court. Further, it is self-evident that Judges do not know what relevant evidence may exist.9(c) The adversarial system is premised on the expectation of competent presentation of the arguments for each party, usually by counsel instructed to act. In almost all cases, despite the obvious disadvantages that flow from it, a court is obliged to hear and determine (as best it can) cases involving an unrepresented litigant. But, the position is different when the court is aware that the self-represented litigant has successfully challenged a refusal to grant legal aid and the question of eligibility has been remitted to the decision maker for reconsideration. In such circumstances, in the absence of a specific and material prejudice to an opponent, it will generally be preferable to adjourn so that the litigant has the opportunity to take advantage of the decision made in his or her9 Complimentary comments made by the Associate Judge about the way in which Mr and Mrs Robertson conducted their case at the hearing can be met by the same criticism: see Bankruptcy notice decision, above n 2, at [65].favour. That is particularly so when a decision directing reconsideration is made in close proximity to the proposed hearing date.10(d) The reasons advanced by ASB to oppose the adjournment were not compelling and did not, in our view, identify any particular prejudice to the bank, if the adjournment application were granted.11The applications to set aside the bankruptcy notices[12] An act of bankruptcy is committed if a debtor has been served with a valid bankruptcy notice, has not made payment within the stipulated time, and cannotsatisfy the Court that he or she has a "cross claim against the creditor" in an amountthat is equal to, or greater than, the judgment debt and which could not have been set up as a defence in the proceeding in which judgment was entered.12[13] Mr and Mrs Robertson applied to set aside each of the bankruptcy notices, on the grounds that they had a qualifying cross claim that they were unable to raise in the proceeding in which Toogood J entered judgment against them. The applications were heard on 16 August 2013 and dismissed in an oral judgment given by the Associate Judge on the same day.[14] The Judge accepted that Mr and Mrs Robertson's cross claim could not have been raised by way of defence to the summary judgment application.13 ApplyingSharma v ANZ Banking Group (NZ) Ltd, the Associate Judge held that it was enoughthat the Robertsons could raise the cross claim "as a claim of true substance which[they] genuinely [proposed] to pursue".14 Associate Judge Bell acknowledged that,if such a "genuine triable claim" were available there was no "residual discretion to10 Generally, see Adrian Zuckerman "No Justice Without Lawyers – The Myth of an Inquisitorial System" (2014) 33 Civil Justice Quarterly 355, the themes in which were developed by the Chief High Court Judge, Winkelmann J, in the 2014 Ethel Benjamin Address: Access to Justice –Who Needs Lawyers? (7 November 2014); to be published in the Otago Law Review.11 Above at [8].12 Insolvency Act 2006, s 17(1)(d)(ii) and (7), set out below at [18].13 Summary judgment decision, above n 3, at [5].14 Bankruptcy notice decision, above n 2, at [5]; Sharma v ANZ Banking Group (NZ) Ltd (1992) 6 PRNZ 386 (CA) at 389.allow the bankruptcy notice to stand".15 If the notices were set aside, no act of bankruptcy would have been committed.[15] After reviewing authorities touching on the duty owed by mortgagees under s 176 of the Property Law Act 2007,16 the Associate Judge summarised the groundsof Mr and Mrs Robertson's complaints:[35] the Robertsons have raised three matters which they say go to the bank's non-compliance with its duty under s 176 of the Property Law Act.(a) They say that in the marketing campaign leading up to the auction in September 2011, Bayleys salespeople were openly advocating that the property would be sold for around the $1 million mark. In particular, they have put in evidence an affidavit by a Clare Thomas and also by Hubert Hays, the purchaser at the auction.(b) They say that the real estate agents have wrongly disparaged them by accusing them of wanting to strip the property. They say that those reports by the land agents improperly influenced the real estate valuers in the estimates they gave for the sale of the property on a forced sale basis.(c) The third point raised by the Robertsons goes to the offer to buy the property by Lifetime Holdings Ltd in March and April 2012.[16] The Judge analysed at some length the evidence filed on behalf of both ASB and the Robertsons in addressing each of those concerns. He concluded that thegrounds advanced did not raise "a triable case for breach of [the s 176] duty or aclaim for a sum that is greater than the judgment against them".17 Accordingly, the applications to set aside the bankruptcy notices were dismissed.18 One set of costs was awarded against Mr and Mrs Robertson, on a 2B basis.15 At [5].16 At [11] and [12], drawing on the Associate Judge's earlier summary of principles set out inSouthland Building Society v Austin [2012] NZHC 497 and observations made by Asher J inPublic Trust v Ottow (2009) 10 NZCPR 879 (HC) at [31] and [33].17 At [64]. An extensive discussion of the relevant evidence can be found at [37]–[63].18 At [66].Legal principles(a) Setting aside a bankruptcy notice[17] Non-compliance with a bankruptcy notice amounts to an act of bankruptcy, on the basis of which an application to adjudge a debtor bankrupt may be made.19The form of the bankruptcy notices and their manner of service were not in issue. So in the absence of a genuine triable cross claim that could not have been advanced on the summary judgment application, both Mr and Mrs Robertson had committed an act of bankruptcy.[18] Section 17(1)(d)(ii) and (7) of the Insolvency Act 2006 provide:17 Failure to comply with bankruptcy notice(1) A debtor commits an act of bankruptcy if—(d) the debtor has not, within the time limit specified in subsection (4),—(ii) satisfied the Court that he or she has a cross claim against the creditor.(7) in subsection (1)(d)(ii), cross claim means a counterclaim, set-off, or cross demand that—(a) is equal to, or greater than, the judgment debt or the amount that the debtor has been ordered to pay; and(b) the debtor could not use as a defence in the action or proceedings in which the judgment or the order, as the case may be, was obtained.[19] Sharma v ANZ Banking Group (NZ) Ltd, referred to above, was decided under the predecessor of s 17.20 No material difference between the two statutory provisions exists. It remains the controlling authority.19 Insolvency Act 2006, ss 13(b), 16 and 17.20 See Insolvency Act 1967, ss 19(1)(d) and (2).[20] Sharma was also a case in which one of the alleged cross claims on which thedebtor relied was based on a bank's conduct of a mortgagee sale; in particular that "sale of improved land was at a gross undervalue" and had the effect of "unlawfully [destroying] the whole value of [Mr Sharma's] interests in the [debtor] companies", of which he was a guarantor.21 At the time Sharma was decided, there was no statutory embodiment of the duty to take reasonable care when selling at a mortgagee sale.[21] Delivering the judgment of this Court in Sharma, Cooke P said:22The Judge held that, as to the appellant's claim based on the execution, it did not satisfy s 19(1)(d) in that it was not in his view a genuine triable cross- demand. That is the criterion laid down or applied in a line of authorities: Re a Debtor [1963] 1 All ER 58, 87 per Lord Denning MR; Thomasen v Nigrounreported, 19 July 1978, CA124/76; and Clark v UDC Finance Ltd [1985] 2 NZLR 636 per Casey J. We accept that this is the proper criterion and thatthe words "genuine" and "triable" require the debtor to demonstrate that he has a claim of true substance which he genuinely proposes to pursue.[22] The test of a genuine triable claim is referable to both liability and quantum.23Section 17(1)(d)(ii) requires the debtor to satisfy the Court that he or she has "a cross claim against the creditor". The term "cross claim" is defined by s 17(7). That definition makes it clear not only that the existence of a cross claim must be established but also that it is equal to or greater than the judgment debt and could not have been used as a defence in the proceeding in which that judgment was entered.24[23] The composite nature of the expression "cross claim" is illustrated by theapproach taken by the High Court of Australia in Vogwell v Vogwell.25 Latham CJ (with whom Starke and McTiernan JJ agreed) said:26The words of the section are that the debtor must satisfy the court that he has"a counter-claim, set-off or cross demand which equals or exceeds theamount of the judgment debt." In the first place it is accordingly clear that the counter-claim, set-off or cross demand must be something sounding in money. What the section contemplates is a claim to the enforcement of a right sounding in money. It must be a real claim; it is insufficient that the21 At 388.22 At 389.23 At 389; Clark v UDC Finance Ltd [1985] 2 NZLR 636 (HC) was referred to with approval.24 The relevant parts of s 17 are set out above at [18].25 Vogwell v Vogwell (1939) 11 ABC 83 (HCA).26 At 85.debtor believes that he has a claim, and the authorities show that the matter to which the court looks is this, – whether it is just that the claim should be determined before the bankruptcy proceedings are allowed to continue; in other words, whether it is a claim which it is proper and reasonable to litigate.[24] Although the words "equal to, or greater than, the judgment debt" ins 17(7)(a) of the Act suggest a need to identify a liquidated sum, in Clark v UDC Finance Ltd,27 Casey J held that an unliquidated claim in tort could be sufficient to meet that criterion.28 That approach, which was not questioned in Sharma reinforces the requirement for the Court to be satisfied that a genuine triable claim exists both as to liability and quantum.(b) Onus of proof[25] Because Mr and Mrs Robertson were precluded from raising their cross claim at the summary judgment hearing, it is necessary to say something about the onus of proof on an application to set aside a bankruptcy notice.[26] If the mortgagee sale had been completed before the date on which summary judgment was entered (5 July 2012), ASB would have carried the burden of satisfying the Court that there was no reasonable cross claim to be tried.29 By contrast, on application of the Sharma test, it became necessary for Mr and Mrs Robertson to satisfy the High Court that they had a "genuine triable" cross claimThat difference led us to explore whether there was any need to refine the Sharmatest in a case such as this.[27] We are satisfied that the effect of a change in onus is more apparent than real. It is difficult to conceive of a factual situation in which the nature of the cross claim would not be sufficient to resist summary judgment, yet could be used to bring a successful application to set aside a bankruptcy notice. In our view, the better approach is to consider objectively whether it can be said a "genuine triable" cross claim exists on the facts as they now stand. That is consistent with the need for the27 Clark v UDC Finance Ltd, above n 23.28 At 637–638, citing Thomasen v Nigro CA124/76, 19 July 1978. See also Re Brink (1980) 30 ALR 433 (FCA) at 436.29 High Court Rules, r 12.2. See also Pemberton v Chappell [1987] 1 NZLR 1 (CA).Court to be "satisfied", that such a claim exists, in terms of s 17(1)(d) of the Insolvency Act.30(c) The duty of a mortgagee exercising a power of sale[28] Section 176 of the Property Law Act provides: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.[29] We do not take issue with the summary of relevant principles contained in theAssociate Judge's judgment.31 For present purposes, we regard the following propositions as most relevant to the decision we must make:(a) The duty is cast upon a mortgagee in an endeavour to ensure that steps are taken to obtain the best price reasonably obtainable, in the circumstances.(b) Taking proper steps does not guarantee that the best price reasonably obtainable will in fact be paid by a purchaser. The inquiry is into the conduct of the mortgagee in exercising its power of sale, not whether30 Set out above at [18].31 Bankruptcy notice decision, above n 2, at [11]–[14].another purchaser (on another day) might have paid more for the property.(c) Compliance with the duty is assessed by reference to the steps taken from the time the mortgagee decides to sell the property to the point of actual sale. That assessment must be viewed in a practical way, having regard to relevant commercial dynamics.[30] Other propositions to which the Associate Judge referred do not have any direct application on the facts of this case. While they are helpful in illustrating steps that might be regarded as fulfilling (or falling short of) the requisite standard on the facts of other cases, care must be taken to consider each case on its particular facts. Whether there has been compliance with the s 176 duty will always be a question of fact and degree.The alleged cross claim(a) The evaluative task[31] In reviewing the evidence to support the asserted cross claim, all that is required is a genuinely triable claim. It is not necessary to go so far as to say that the claim for an amount equal to or greater than that shown on the bankruptcy notice is probable, or even likely, to succeed.[32] The Court's approach on an application to set aside a bankruptcy notice should be treated as akin to that taken when affidavit evidence is considered on an application for summary judgment or when continuation (or otherwise) of a caveat is in issue. As with those types of applications, the summary nature of the procedure"is wholly unsuitable for the determination of disputed questions of fact".32However, in assessing the strength of a claim the Court need not accept uncritically evidence that is inherently lacking in credibility; for example, where it is inconsistent with contemporary documents or inherently improbable.3332 Sims v Lowe [1988] 1 NZLR 656 (CA) at 659–660 (in the context of caveat proceedings).33 Generally, see Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341 and, in the summary judgment context, Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].(b) The nature of the inquiry[33] ASB became entitled to exercise its power of sale in late January 2011, following expiration of the time within which Mr and Mrs Robertson were to comply with the Property Law Act notices served upon them. The property did not sell until late August 2012. Whether there was any breach of ASB's s 176 duty must be judged against what occurred between February 2011 and August 2012, with the need for some nexus to exist between any problematic aspects of ASB's conduct and the price ultimately obtained.(c) February 2011 to October 2011 – the first attempt at a mortgagee sale[34] During 2010, Mr and Mrs Robertson (with the concurrence of ASB) endeavoured to sell the property themselves. They enlisted assistance from Bayleys Real Estate, Harveys Real Estate, Mike Pero Real Estate and Harcourts Real Estate. Mr and Mrs Robertson have given evidence that, as at 26 May 2010, the Hibiscus Coast Highway property was worth $2.2 million, a figure supported by both a government and a registered valuation. However, an auction that took place on 24 February 2011 failed to find a buyer.[35] On 23 March and 8 April 2011, ASB obtained valuations from QV Valuations and Albion Banks Valuations respectively. They included "forced sale" valuations, in the sums of $1.6 million to $1.8 million and $1.85 million respectively. ASB engaged Bayleys to market the property for them. As indicated previously, Bayleys had been one of the four real estate agents engaged by Mr and Mrs Robertson to sell the property in 2010 and early 2011.[36] One of the Bayleys' agents, Ms Cherrington, had been involved as part of Mr and Mrs Robertson's attempts to sell the property in 2010. Another agent, Ms Vujnovich of Harveys Real Estate, had spoken to Ms Cherrington. There is evidence that Ms Cherrington told Ms Vujnovich that she considered the property was only worth between $1 million and $1.2 million, despite the valuations to which Mr and Mrs Robertson refer.[37] A marketing plan was devised by Bayleys in August 2011. Mr and Mrs Robertson take the view that interest in the property diminished once it was known that a forced sale was imminent. They say that they believed, from talking to a Mr Ritchie from ASB, that the bank was conducting its sale process based on two valuations that had assessed market value at between $2 million and $2.19 million. It is likely that those were based on a transaction between a willing vendor and willing purchaser, as opposed to a forced sale. That would account for the difference between those valuations and the "forced sale" valuations.[38] Mr and Mrs Robertson ascertained that Bayleys considered the property would sell for about $1 million. They were approached by a person whom they understood was a potential buyer, Mr Hays. He told Mr and Mrs Robertson that Ms Cherrington had given that information to him. While Mr Hays' subsequentinvolvement in the sale process34 suggests that his evidence may be unreliable, it is corroborated by another potential purchaser, Ms Thomas. She deposes that she was told by an agent that the property would likely sell for $1 million in mid-September 2011. Ms Maddren, a credit controller at ASB, states that ASB did not authorise such communications. Mr Sellars, another Bayleys agent, denied telling Ms Thomas that. For the purposes of the present application, Ms Thomas's evidence should be accepted.[39] In our view, this evidence provides a plausible narrative that Mr and MrsRobertson believed that Bayleys, acting as ASB's agent, was undermining the saleprocess with a view to obtaining a quick sale from which a commission could be taken. On 27 September 2011, Mr and Mrs Robertson sent an email to Mr Dabb, a credit recoveries manager at ASB, in which they expressed concerns that the agents had been giving information of that type to potential buyers. Mr Dabb responded that ASB took its s 176 duty seriously, but warned there was likely to be a shortfall between any sale price and the amount owing to the bank at the time of sale.[40] Ms Cherrington and Mr Sellars of Bayleys reported on a weekly basis to ASB. In reports completed in late September 2011, these agents made three34 See below at [43].allegations to support a view that they had been compromised in their ability to sell the property. These agents asserted that:(a) Mr and Mrs Robertson had rejected a number of offers made personally to them because they did not meet expectations of a sale price in the vicinity of $1.5 million to $2 million.(b) Mr and Mrs Robertson were likely to strip the property of fixtures and fittings before any sale.(c) The garage did not have a code compliance certificate.[41] Mr and Mrs Robertson reject those allegations, deposing that:(a) Mr Hays was the only person to approach them with an offer that they rejected.(b) While they spoke to one potential purchaser about the value of chattels, they did not suggest that they would strip the property of fixtures and fittings.(c) A code compliance certificate did exist. They produced a copy in evidence.[42] Mr and Mrs Robertson's evidence is confirmed by a nephew who was livingwith them in the property. He says that the home was left in good condition and that he never saw them speak to potential buyers through the process. Another person, Ms Goijarts, deposed that she had helped to tidy the property when open homes were held.[43] On 28 September 2011, an auction was held. Mr Hays, whose earlier offer had been rejected by Mr and Mrs Robertson, was the successful bidder. The purchase price was $2 million. No deposit was paid. It turned out that his bid was false. Mr and Mrs Robertson deny any involvement in his attempt to buy theproperty. Nevertheless, ASB became suspicious that Mr and Mrs Robertson may be impeding the sale process, to ensure they could stay in their home.[44] ASB referred the issue to its solicitors and suggested that the Robertsons seek legal advice. On 13 October 2011, a solicitor representing the Robertsons advisedASB's solicitors that the Robertsons believed there had been a possible breach ofASB's s 176 duty.(d) October 2011 to April 2012 – the second attempted mortgagee sale[45] Updated valuations were obtained by ASB in October 2011. QV Valuations assessed a forced sale value at $1.2 to $1.35 million; Albion Banks opined it was worth $1.5 million.35[46] In February 2012, ASB again engaged Bayleys to market and sell the property. On this occasion Ms Seed and Ms Stevenson were the agents responsible for the sale. Ms Seed has given evidence that she did not tell any prospective purchaser that the property could be sold for $1 million.[47] On 1 March 2012, a company called Lifetime Holdings Ltd contacted Mr and Mrs Robertson with an offer to purchase the property for $2.2 million. Lifetime had made a previous offer, in February 2011, when Mr and Mrs Robertson were attempting to sell. On that occasion vendor finance was in issue and a sale could not proceed.[48] The March 2012 offer from Lifetime included a payment by way of a deposit of $1.5 million with the remaining $700,000 being paid in 12 months time. Vendor finance was required but Lifetime was prepared for Mr and Mrs Robertson to occupy the property pending settlement. The offer was conditional on Lifetime obtaining a satisfactory valuation. ASB refused the offer.[49] Attempts were made by Mr and Mrs Robertson to change ASB's stance.They did not succeed, notwithstanding some shifts in the terms proposed. Mr and35 Compare with the February/March 2011 valuations: see above at [35].Mrs Robertson believe that ASB made a final decision to that effect on 2 April 2012, two days before a scheduled auction.[50] On 4 April 2012, the property was auctioned again. On behalf of ASB, Ms Maddren has deposed that the reserve price was not met. She has not given any evidence about whether any bids were made, the amount of any bids and the specified reserve price. In that circumstance, it is not possible to assess whether the decision to pass in was reasonable.(e) April 2012 to August 2012 – third attempted mortgagee sale[51] Following the auction on 4 April 2012, negotiations with Lifetime were revived. On 10 April 2012, after the Easter break, ASB indicated that it would accept an offer from Lifetime provided a sum of $100,000 were paid within three days. Mr and Mrs Robertson say that the notice to Lifetime was too short for that to be done and that the likelihood of a sale at a price in the vicinity of $2 million was lost as a result.[52] ASB then sought summary judgment against Mr and Mrs Robertson. On 16 April 2012, those applications were adjourned because of ongoing negotiations with Lifetime. While Mr and Mrs Robertson contend that Lifetime renewed an offer on 19 April 2012 for settlement by 27 April 2012, Ms Maddren denies that ASB received any formal communication about the offer. Nor had the sum of $100,000 been paid to ASB or Mr and Mrs Robertson.[53] Lifetime withdrew its offer on 28 April 2012. It appears that occurredbecause Lifetime's financiers had learnt that the property could be purchased for $1.2 million. It is unclear from what source that information came.[54] In mid July 2012, ASB engaged Bayleys to sell the property by tender. That process closed on 23 August 2012. The highest bid was $1.2 million. Payment of that sum left a shortfall of $811,807.37 (including costs).[55] Mr and Mrs Robertson contend that ASB should have accepted one of the offers from Lifetime and that if they had the purchase price would have been$2.1 million. The difference between that and the actual sale price (approximately $900,000) is more than the amount that remained outstanding following the sale by tender.36Analysis[56] In our view, it is reasonably arguable that the actions taken by agents acting for ASB in 2011 may have compromised a sale of the property at a higher price. Ms Cherrington's allegations about Mr and Mrs Robertson's conduct and Ms Thomas' evidence about being told that the property would sell for about$1 million support that view. The next question is whether the subsequent steps that ASB took were sufficient to remove the prospect of a genuinely triable issue arising in respect of the s 176 duty.[57] Notwithstanding the subsequent steps taken by ASB to sell the property, we are satisfied that there is a genuine triable cross claim that the s 176 duty was breached. We reach that view on the basis that we must accept evidence given by Mr and Mrs Robertson and their witnesses unless it were inconsistent with contemporary documents or otherwise inherently improbable.37 The following evidence, if accepted at trial, is likely to be sufficient to enable a Court to inferbreach of ASB's s 176 duty:(a) Bayleys, acting as ASB's agent in 2011, did not market the property adequately for sale and compromised the likelihood of any sale at market value by providing false information to potential purchasers about steps that might be taken by Mr and Mrs Robertson to sabotage any purchase.38 That information was provided in late September 2011, and beyond.(b) ASB failed to deal reasonably with the proposal for settlement put by Lifetime in March and early April 2012. That led to an unsuccessful36 See above at [5] and [54].37 See above at [32].38 See above at [38], [40] and [41].auction on 4 April 2012, in respect of which there is presently nothing to indicate what bids were made and the amount of the reserve price.39(c) Insufficient efforts were made by ASB to pursue and complete an agreement with Lifetime after the 4 April 2012 auction. The amount offered was well in excess of the amount actually paid by the successful tenderer, after completion of that process on 23 August 2012. Had ASB taken adequate steps to verify the bona fides of the proposed transaction with Lifetime, a better price may have been obtained.40[58] The cross claim relies on evidence of inadequate marketing in the period to September 2011, the misrepresentations made to potential purchasers from September 2011 and failure to consider adequately the offers made by Lifetime in the period between 1 March 2012 to 28 April 2012, when Lifetime withdrew its offer. Although some of the evidence relates to decisions actually made by ASB, the bulk of the allegations arise out of the conduct of its agent, Bayleys.[59] In our view, the Associate Judge erred in his approach to assessment of whether there was a genuine triable cross claim. On our reading of the judgment, his findings more closely reflect views on the merits of the claim, as opposed to an assessment of whether there was enough evidence to go to trial. Two examples to support that view will suffice:(a) The time at which any breach of the s 176 duty arose might be an important factor. If, for example, there was evidence at trial that a higher bid could have been accepted at the 8 April 2012 auction, that could have an impact on the amount of any shortfall that may or may not have existed at that time, taking into account accrued interest and relevant costs owing by Mr and Mrs Robertson.39 See above at [50].40 See above at [51]–[54].(b) Associate Judge Bell rejected the possibility of using the Lifetime offer as a measure of damages.41 While it is true that the valuations do not suggest that more than $1.85 million could have been obtained on sale, ordinarily a question such as that will be determined at trial, after relevant evidence has been tested. In our view, on assessment of the evidence required on an application to set aside a bankruptcy notice, it was not open to the Judge to discount the possibility that the amount of that offer could be used as a measure for damages.Result[60] For those reasons, we allow the appeal. The Associate Judge's decision not to set aside each of the bankruptcy notices is quashed, as is the order for costs made against Mr and Mrs Robertson on those applications.[61] In substitution, an order that each bankruptcy notice be set aside is made. As to costs, because Mr and Mrs Robertson are self-represented, they are entitled to usual disbursements on their successful applications in the High Court and on the appeal.Solicitors:Bell Gully, Auckland for Respondent41 Bankruptcy notice decision, above n 2, at [63].