DESMOND JAMES ALBERT CONWAY v MERCEDES-BENZ FINANCIAL SERVICES NEW ZEALAND LIMITED [2018] NZSC 16

DESMOND JAMES ALBERT CONWAY v MERCEDES-BENZ FINANCIAL SERVICES NEW ZEALANDLIMITED [2018] NZSC 16 [23 February 2018]IN THE SUPREME COURT OF NEW ZEALANDSC 119/2017[2018] NZSC 16BETWEEN DESMOND JAMES ALBERT CONWAYApplicantAND MERCEDES-BENZ FINANCIALSERVICES NEW ZEALAND LIMITEDRespondentCourt: Elias CJ, William Young and OʼRegan JJCounsel: J P Dallas for ApplicantP M Hunter for RespondentJudgment: 23 February 2018JUDGMENT OF THE COURTA The application for leave to appeal is dismissed.B The applicant must pay costs of $2,500 to the respondent.____________________________________________________________________REASONS[1] In 2011, the applicant purchased three Mercedes-Benz vehicles, all of whichwere financed by the respondent. The applicant defaulted on his obligations under thefinancing agreements between him and the respondent. The respondent repossessedtwo of the vehicles in 2013 and repossessed the third in 2015. It sold the vehicles andcommenced proceedings to recover the amount outstanding under the financingagreements in excess of the amount realised from the sales.[2] The applicant argued that the respondent had failed to comply with therequirements for the giving of notice of the sale of the vehicles subject to the securityinterests created by the financing agreements. His arguments were rejected in the HighCourt and judgment was entered in favour of the respondent.1[3] The applicant appealed to the Court of Appeal, which dismissed his appeal.2He now seeks leave to appeal to this Court against the decision of the Court of Appeal.[4] The essence of the applicant's argument in the Court of Appeal was that eachof the financing agreements between him and the respondent was a "mortgage overgoods". That argument was rejected by the Court of Appeal. If it had been accepted,the applicant argued that the respondent had not complied with the notice requirementsof the Property Law Act 2007, which, he said, applied because of the operation ofs 114(4) of the Personal Property Securities Act 1999 (PPSA).[5] Section 114 provides for the giving of notice of the proposed sale of collateralother than consumer goods (at the relevant time, the notice requirements relating toconsumer goods were those set out in the Credit (Repossession) Act 1997). Section114(4) of the PPSA provides an exception to the notice requirements under s 114. Itapplies where the security interest is created or provided for by a mortgage over goodsand requires that the notice comply with ss 128 to 136 of the Property Law Act 2007,rather than s 114 of the PPSA.[6] The Court of Appeal reviewed the documentation relating to the sale of thevehicles to the applicant and the financing agreements between the applicant and therespondent. It concluded that the security arrangements between the applicant and therespondent were not a mortgage over goods so s 114(4) of the PPSA did not apply.[7] The applicant argues that the application of s 114(4) to the documentationbetween the respondent and the applicant in this case gives rise to a matter ofcommercial significance, though there is no elaboration on that statement in the1 Mercedes-Benz Financial Services New Zealand Ltd v Conway [2016] NZHC 1896 (Fogarty J).2 Conway v Mercedes-Benz Financial Services New Zealand Ltd [2017] NZCA 463 (Clifford,Simon France and Toogood JJ).submissions filed on behalf of the applicant.3 The respondent takes issue with that, onthe basis that the issue before the Court of Appeal depended on the documentationbetween the parties. The respondent also argues the outcome of the appeal would beunlikely to change the outcome of the case.[8] We accept that the notice requirements under s 114 of the PPSA may give riseto a point of commercial significance.4 But we accept the respondent's submissionthat the issue in each case will be largely governed by the terms of the securityarrangements between the parties. We do not see this case as an appropriate one toaddress the point given that its resolution is unlikely to affect the ultimate issue of theapplicant's obligation to pay the respondent the amounts owing under agreementspursuant to which the respondent provided credit to the applicant.[9] The application for leave to appeal is dismissed.[10] The applicant must pay costs of $2,500 to the respondent.Solicitors:Simpson Western, Auckland for Respondent3 The notice of application for leave to appeal raised only the point about the application of s 114(4),but in submissions the applicant raised a number of consequential issues. As these were not dealtwith by the Court of Appeal and were not raised in the notice of appeal, we do not engage withthem.4 Senior Courts Act 2016, s 74(2)(c); Supreme Court Act 2003, s 13(2)(c).