BOYD AND BOYD HOLDINGS LIMITED v ANZ BANK NEW ZEALAND LIMITED [2015] NZHC 2732

BOYD AND BOYD HOLDINGS LIMITED v ANZ BANK NEW ZEALAND LIMITED [2015] NZHC 2732 [5 November 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2015-485-391[2015] NZHC 2732BETWEEN DAVID STEWART BOYD AND BOYDHOLDINGS LIMITEDPlaintiffsAND ANZ BANK NEW ZEALAND LIMITEDDefendantHearing: 3 November 2015Appearances: D Calder for the PlaintiffsS M Hunter/O M De Pont for the DefendantJudgment: 5 November 2015JUDGMENT OF THOMAS JThis judgment was delivered by me on 5 November 2015 at 3.00 pmpursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate:.Solicitors:John Dean Law Office, Wellington.Gilbert/Walker, Auckland.Introduction[1] The defendant, ANZ Bank New Zealand Ltd (the Bank), has applied to strikeout the plaintiffs' claim against it in negligence and for summary judgment and costs.Alleged facts[2] The second plaintiff, Boyd Holdings Ltd (BHL), is a property development company. The first plaintiff, Mr Boyd, is a builder, property investor and property developer. The plaintiffs were customers of the Bank.[3] On 6 April 2006, BHL purchased a residential property at 15 Korimako Streetin Hamilton ("the Property") for a purchase price of $290,000. The purchase pricewas met by a loan from the Bank secured by a mortgage and a guarantee given by Mr Boyd. BHL says it purchased the Property with the intention of developing it.[4] By 2006, Mr Boyd had built up a residential rental property portfolio of four houses in the Hamilton area, approximately worth $1.3 million. In or about 2006, Mr Boyd contacted the Bank to arrange a loan to develop the Property. He provided the Bank with all the financial information it requested.[5] The plaintiffs claim that the Bank, by its employee, agreed it would lend Mr Boyd and/or BHL sufficient funds for the completion of the development on the condition that Mr Boyd sell his four rental properties.[6] In reliance on that advice, by 24 October 2006, Mr Boyd had sold all his rental properties.[7] Mr Boyd then contacted the Bank to arrange and finalise funding for the development. However, he was informed that the Bank would not lend the required funds to Mr Boyd and/or BHL because, although Mr Body and/or BHL had sufficient equity in the Property, Mr Boyd and/or BHL did not have sufficient income to satisfy the Bank that they could meet the loan repayments.[8] Mr Boyd and/or BHL did not have sufficient funds to develop the Property and sold it on 1 June 2007.[9] The plaintiffs complained to the Bank and the Banking Ombudsman about the alleged lending advice.The plaintiffs' statement of claim[10] The plaintiffs say Mr Boyd would not have sold his four rental properties butfor the Bank's advice that it would lend Mr Boyd and/or BHL the funds it required to complete the development.[11] As a result of the reliance on the Bank's advice, the plaintiffs claim they have suffered the following losses:(a) loss of income producing assets, being the four rental properties;(b) loss of income from the rental properties from the date each was sold to the date of judgment; and(c) legal and other costs.[12] In the alternative, the plaintiffs say they have suffered the loss of opportunity to develop the Property, from which the plaintiffs claim they would have derived a net profit of $2,100,000.Statement of defence[13] The Bank denies it provided the alleged lending advice to the plaintiffs.[14] The Bank says it did not cause Mr Boyd to lose the properties; he chose to sell these properties to third parties on the open market. If the properties were sold at an undervalue, that was not done with the knowledge or on the advice of the Bank.[15] In any event, says the Bank, the plaintiffs' cause of action had accrued prior to 22 May 2009, being six years before these proceedings were issued and is therefore time barred under the Limitation Act 1950.Application for strike-out and summary judgment[16] The Bank has applied for the pleadings to be struck out and for summary judgment on the grounds the claims are time barred.Relevant lawStrike-out and summary judgment[17] Rule 15.1 of the High Court Rules provides for orders striking out all or part of a pleading. The Bank relies on r 15.1(1)(a) saying that the plaintiffs' pleadingdiscloses no reasonably arguable cause of action.[18] Where a claim is untenable as a matter of law, it will generally be appropriate to apply to strike it out.1[19] Summary judgment may be given against a plaintiff if a defendant satisfies the Court that none of the causes of action in the statement of claim can succeed.2 In summary, the general principles are:3(a) Commonsense, flexibility and a sense of justice are required.(b) The onus is on the defendant seeking summary judgment to show thatnone of the plaintiffs' cause of action can succeed. The Court must beleft without any real doubt or uncertainty.(c) The Court will not hesitate to decide questions of law where appropriate.1 Bernard v Space 2000 Ltd (2001) 15 PRNZ 338 (CA).2 High Court Rules, r 12.2(2).3 Gardner v Gardner [2015] NZHC 2018 at [20] (footnotes omitted).(d) The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements and affidavits.(e) In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.(f) In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.(g) Once the Court is satisfied that there is no defence, the Court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the Rules which provide for the just, speedy and inexpensive determination of proceedings.[20] In respect of both applications, the issue is the same: that is, that there is no reasonably arguable cause of action and none of the causes of action could succeed as the proceedings are out of time.[21] The Bank has applied for both strike out and summary judgment. However, as Elias CJ said in Westpac Banking Corporation v M M Kembla New Zealand Ltd:4[60] Where a claim is untenable on the pleadings as a matter of law, it will not usually be necessary to have recourse to the summary judgment procedure because a defendant can apply to strike out the claim under Rule 186. Rather Rule 136(2) permits a defendant who has a clear answer to the plaintiff which cannot be contradicted to put up the evidence which constitutes the answer so that the proceedings can be summarily dismissed.4 Westpac Banking Corporation v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (2000) (CA).Section 4 of the Limitation Act 1950[22] Section 4 of the Limitation Act 1950 (the Act) provides:54 Limitation of actions of contract and tort, and certain other actions(1) Except as otherwise provided in this Act or in subpart 3 of Part 2 of thePrisoners' and Victims' Claims Act 2005, the following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued, that is to say,—(a) actions founded on simple contract or on tort:(b) actions to enforce a recognisance:(c) actions to enforce an award, where the submission is not by a deed:(d) actions to recover any sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture.[23] A cause of action accrues when every fact exists which it is necessary for aplaintiff to prove in order to support a plaintiff's right to judgment.6[24] A cause of action in negligence arises not on breach of a duty of care but when a plaintiff first sustains loss attributable to the breach of duty of a defendant.7[25] The Supreme Court specifically considered the question of whether"reasonable discoverability" should be applied to all causes of action.8 As Tipping J put it:9In my view the numerous references in the Limitation Act to accrual of a cause of action can only be constructed as references to the point of time at which everything has happened entitling the plaintiff to the judgment of the Court on the cause of action asserted. Save when the Limitation Act itselfmakes knowledge or reasonable discoverability relevant, the plaintiff's stateof knowledge has no bearing on limitation issues. Accrual is an occurrence- based, not a knowledge-based, concept. The Limitation Act as a whole is structured around that fundamental starting point. The periods of time selected for various purposes must have been chosen on that understanding.5 Limitation Act 2010, s 59 and Limitation Act 1950, s 2A; 1950 Act continues to apply, despite its repeal, to actions based on acts or omissions before 1 January 2011.6 Attorney-General v Williams [1990] 1 NZLR 646 (CA) at 678.7 Thom v Davys Burton [2008] NZSC 65, [2009] 1 NZLR 437 at [15].8 Trustees Executors Ltd v Murray [2007] NZSC 27, [2007] 3 NZLR 721.9 At [69].Analysis[26] It is helpful to, first, outline the chronology of events: 24 October 2006 – sale of last of the plaintiffs' rental properties. 1 June 2007 – sale of the Property. 14 December 2011 – Mr Boyd telephoned the Bank to make a formalcomplaint about the advice he received ("first complaint"). 26 December 2011 – Mr Boyd followed this up with a written complaint sent to an incorrect email address. 21 November 2012 – Mr Boyd lodged a complaint with the Banking Ombudsman. 22 November 2012 – Banking Ombudsman advised the matter cannot be investigated as the Bank must have the opportunity to consider the complaint first. 7 December 2012 – email from the Bank advising it did not accept Mr Boyd's claim and that he would have to take his complaint to thecustomer relations team. 23 April 2013 – email from the Bank's customer relations manageradvising it would not pay Mr Boyd any compensation. 14 May 2013 – Banking Ombudsman advised she is not able to investigate complaints in excess of $200,000. 4 June 2013 – Banking Ombudsman advised she had closed the file. 22 May 2015 – statement of claim filed.[27] There are two issues to be considered:(a) What was the date on which the cause of action accrued?(b) Can the limitation period be extended or postponed to take into account time spent by the plaintiffs in pursuing remedies outside of the Court?What was the date on which the cause of action accrued?[28] The essential issue for me to determine is the date at which the cause ofaction accrued: was it before 1 June 2007 such that the plaintiffs' claim is timebarred or did it, as the plaintiffs claim, accrue on 4 June 2013, the date on which the Banking Ombudsman closed the file?[29] The elements of the tort of negligent misstatement are:10(a) a false or misleading statement;(b) made in circumstances where a duty of care is owed to the plaintiff;(c) reasonable reliance on the statement by the plaintiff; and(d) with resulting loss to the plaintiff.[30] In Mr Hunter's submission for the Bank, all elements of the claim are allegedto have occurred eight or nine years before the proceedings were issued, thus the claim is out of time pursuant to s 4 of the Act.[31] The plaintiffs maintain that the cause of action did not accrue until the Bank's internal complaints process had been exhausted and the plaintiffs' request for10 In cases of negligent misstatement, the conventional two-stage approach under the headings of proximity and policy should be employed to determine the outcome of the duty of care issue;Attorney-General v Carter [2003] 2 NZLR 160 (CA) at [30]-[32] confirmed in Carter Holt Harvey Ltd v Minister of Education [2015] NZCA 321 at [114].compensation was declined and the Banking Ombudsman had completed her investigation and closed the file.[32] In Mr Calder's submission, the plaintiffs did not suffer any loss until theBanking Ombudsman made her final decision because, up and until that time, the Bank might have compensated the plaintiffs for their claimed losses and the plaintiffs would therefore not have suffered any loss at all. Mr Calder acknowledges that the Banking Ombudsman could not provide Mr Boyd with the relief he sought (considered below) but notes that the Banking Ombudsman's terms of reference donot make the $200,000 compensation limit immediately apparent.[33] The plaintiffs' position that they suffered loss from the date the BankingOmbudsman closed the file cannot be right.[34] The plaintiffs' case is that the loss they suffered was caused by the actionsthey took in reliance on the Bank's statements. The question of reliance is brokeninto two aspects: (1) whether the statement was reasonably capable of being relied upon; (2) whether, in fact, there was reliance causing loss to the claimant. In terms of the second limb, actual reliance need not be proved; reliance can be inferred where reasonably supported by the facts and evidence.11 The BankingOmbudsman's decision to close the file had no bearing on the loss allegedly sufferedin reliance on the Bank's statements; it was simply an avenue taken by the plaintiffsafter the cause of action had accrued in an attempt to obtain compensation for loss which they say they have suffered.[35] In any event, I do not accept the submission that, up and until the Banking Ombudsman closed the file, the Bank may have compensated the plaintiffs for their claimed losses and the plaintiffs, therefore, would not have suffered any loss at all. The power of the Banking Ombudsman to make an award is limited to $200,00012 so even if, at the very best, the plaintiffs were awarded that sum, they would not have been compensated for the loss they claimed to have suffered.11 Carter Holt Harvey Ltd, above n 10, at [123].12 See "Banking Ombudsman Terms of Reference April 2013" clauses 18 and 20 and glossary(defines "Financial limit") as at 1 July 2010.[36] The plaintiffs' claim is based on loss of income producing assets (the rental properties), the last of which was sold in October 2006. The plaintiffs claim loss from the date of sale onwards. The alternative claim in respect of lost development opportunity claims loss from the date the Property was sold on 1 June 2007. The plaintiffs have, therefore, identified the date when they suffered loss and that is the date by reference to which the limitation period is calculated.[37] For those reasons, I am satisfied that the date on which the cause of action accrued must have been some time before 1 June 2007.[38] As the cause of action accrued by 1 June 2007, at the latest, the plaintiffs had six years to bring their claim (expiring by 1 June 2013).Can the limitation period be extended or postponed to take into account time spent by the plaintiffs in pursuing remedies outside the Court?[39] The question then is whether the Court should recognise some exception to the statutory limitation period in the form of extension or postponement in cases where parties pursue other remedies outside the court process.[40] Mr Hunter submits that Mr Boyd did not complain to the Bank untilDecember 2011. Even throughout the Bank's internal complaints process and the Banking Ombudsman's investigation, Mr Boyd repeatedly said that he would issue proceedings. In Mr Hunter's submission, Mr Boyd therefore clearly did not regard either process as a bar to legal action. Furthermore, Mr Boyd was warned by the Banking Ombudsman that time limitations might affect his claim, albeit that this was in the context of his complaint to her.[41] It is Parliament's intention that limitation periods may sometimes operateharshly and this is one of those occasions, Mr Hunter says. Mr Boyd knew all the facts; he threatened to sue but failed to act until well after the limitation period had expired.[42] Mr Calder emphasises that Mr Boyd was not sophisticated in legal matters and, had he known of the limitation provisions, he would have commenced his proceedings at an earlier date. Mr Calder explains that Mr Boyd followed what hethought was the correct procedure, following the Bank's process and complaining tothe Banking Ombudsman.[43] Mr Calder submits this is not a case in which the plaintiffs sat on their hands. The plaintiffs have pursued their claims diligently and did not engage in the expenseof litigation at the outset. That, in Mr Calder's submission, was a responsibledecision and congruent with their duty to mitigate their loss.[44] In Mr Calder's submission, Mr Boyd's emails did not make it clear that hewas aware of the statutory time limit and his comments about not having time to wait and threats to issue proceedings were simply attempts by him to motivate the Bank to settle the claim.[45] In any event, Mr Calder says the passage of time has not prejudiced the Bank because it has known the nature and particulars of the plaintiffs' claims since14 December 2011.[46] Mr Calder seeks to distinguish the cases referred to by Mr Hunter and submits there are no cases directly on point, that is, whether reference to an Ombudsman should effectively pause the ticking of the limitation clock. However, I note, even on that approach, the plaintiffs were still out of time.[47] It was almost two years after the date of which the Banking Ombudsman closed the file that these proceedings were filed. Even if the dates when the complaint was with the Banking Ombudsman and/or the plaintiffs had first complained to the Bank were extracted from the time period, the claim was still not filed within the limitation period.[48] In pursuing the complaints procedure under the Banking Ombudsman Scheme, the plaintiffs must be taken to have made a conscious decision to pursue other remedies in preference to bringing an action in Court. In Stewart v Grey RiverMining Ltd, it was held in the context of a strike out application on the grounds of delay:13The fact that the plaintiff chose to pursue other remedies dot not in any way, in my view, change the nature of the delay in these proceedings so that they are not inordinateIt is quite clear the plaintiff made a conscious decision to pursue the alternative remedies in preference to prosecuting this claim. It seems [to] me in circumstances where a plaintiff chooses to prosecute other remedies and to allow a High Court proceeding to go to sleep in circumstances where he makes no efforts to obtain the acquiescence of defendants it cannot be said that the delay is excusable.[49] The same analysis applies in this case.[50] The argument that the plaintiffs could not sue for negligence until they hadfollowed the Bank's own complaints process is clearly wrong. As Mr Hunter submits, such an approach would deny consumers access to the courts and force them to follow other avenues of complaints in the first instance.[51] There is no special provision which exists to extend or postpone the limitation period for plaintiffs who have pursued alternative remedies outside the court process. Any such exception would contravene the policy justifications behind the limitation period, which are:14(a) a defendant should be free from the jeopardy of litigation based on long past events, subject to the public interest with regard to certain classes of defendants;(b) the concern to prevent the litigation of claims based on stale evidence in that potential defendants should not be required to preserve possible evidence forever; and(c) an assurance that plaintiffs do not sleep on their rights. Plaintiffs must have an incentive to commence their claims with due diligence.13 Stewart v Grey River Gold Mining Ltd HC Christchurch A517/78, 19 December 1991 at 85.14 W v Attorney-General [1999] 2 NZLR 709 (CA) at [79]-[82] per Thomas J.[52] The question of whether an extension of time should be allowed when a dispute has been submitted to alternative dispute resolution or to an Ombudsman was specifically addressed in a report for the Law Commission.15 The recommendation was that no special provision be made to extend time in such circumstances. Parliament can, therefore, be taken to have specifically turned its mind to the issue and, notably, the Limitation Act 2010 did not include a provision extending limitation periods where the parties are pursuing alternative dispute resolution. It is not for the courts to mandate exceptions when the statutory position is otherwise clear.[53] I am conscious of the overall justice of the case. Arguably, the plaintiffs should not be denied a day in Court pursuing those against whom they have a complaint.16 However, the harsh realities of s 4 of the Act must operate.Result[54] For the reasons given, the plaintiffs' claim is struck out. The Bank is entitledto costs on a 2B basis._______________________Thomas J15 Law Commission Limitation Defences in Civil Cases: Update Report for the Law Commission(NZLC MP16, 2007).16 S P Liggett v Goldcorp Exchange Ltd (in receivership) HC Auckland CP41/94, 14 June 1996 at 106.