GENERAL FINANCE LIMITED v SEREPISOS [2017] NZHC 749

GENERAL FINANCE LIMITED v SEREPISOS [2017] NZHC 749 [13 April 2017]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2016-485-835[2017] NZHC 749BETWEEN GENERAL FINANCE LIMITEDPlaintiffAND ALIKI SEREPISOSDefendantHearing: 16 March 2017Appearances: S O McAnally for the plaintiffK Smith for the defendantJudgment: 13 April 2017JUDGMENT OF ASSOCIATE JUDGE SMITHCONTENTSApplication for adjournment ........................................................................................................... [2]Background ........................................................................................................................................ [9]Ms Serepisos' opposition ................................................................................................................. [26]The evidence filed by Ms Serepisos in opposition ......................................................................... [31]Evidence in reply for General Finance .......................................................................................... [52]Principles applicable to summary judgment applications ........................................................... [62]The issues to be decided .................................................................................................................. [65]Reasons for declining adjournment ............................................................................................... [68]Analysis ........................................................................................................................................ [80]Result ............................................................................................................................................... [111][1] The plaintiff (General Finance) applies for summary judgment against Ms Serepisos for recovery of advances, interest and costs totalling $294,667.59. Ms Serepisos opposes the application. She says that General Finance failed to discharge its duty under s 176 of the Property Law Act 2007 (the PLA) to take reasonable care to obtain the best price reasonably obtainable when it sold anapartment in Tory Street, Wellington (the property), over which the advances were secured, and that it was guilty of inordinate delay in selling once it had decided to sell the property. She also submits that it would be unfair to enter summary judgment in the particular circumstances of the case, and that the court should exercise its discretion to refuse the application.Application for adjournment[2] On the day before the hearing Mr Smith, counsel for Ms Serepisos, filed a memorandum seeking an adjournment of the hearing to enable Ms Serepisos to adduce further evidence by way of a supplementary affidavit. The supplementary affidavit would address:(a) a valuation of the property by the agents in the amount of $995,000;(b) the time period at or around the relevant periods as to the time usually expected in the real estate industry for the effective sale of an apartment in central Wellington;(c) the commission paid for the "collapsed" first sale/ to the agentinvolved in the second sale (an earlier sale of the property by General Finance was cancelled by it when the purchaser failed to settle); and(d) the sale with the property of Ms Serepisos' personal chattels valued at $15,000.[3] The adjournment application was opposed by Mr McAnally, counsel for General Finance, and I heard argument on it when the case was called on 16 March 2016.[4] When the case was called, Mr Smith raised an additional ground in support ofhis adjournment application. He advised that on 14 March 2017 Ms Serepisos' son Eleftherios ("Terry") Serepisos, who has been acting as Ms Serepisos' attorney in the defence of the claim, told him that there was a "close personal friendship" between Ms Muollo, the agent who was involved in selling the property for General Finance,and the eventual purchaser of the property. Mr Smith was unable to explain the nature of this relationship any further, and he could not tell me when Ms Serepisos or Mr Serepisos first became aware of it. Nor was he able to take up my invitation to stand the case down until 2.15pm for him to obtain an affidavit corroborating the"close personal friendship" contention. Mr Serepisos was said to be in the United States and unavailable, and Ms Serepisos' command of English was said to be notgood.[5] Mr Smith also raised a concern over a possible conflict which might preventhim from continuing to act in the matter. As I understood the concern, Mr Smith'sfirm had acted in the past for close relatives of Ms Muollo.[6] I advised counsel that I was not prepared to grant an adjournment on the basis of the grounds advanced by Mr Smith in his memorandum dated 15 March 2017, but I would hear further from counsel on the new ground for adjournment raised by Mr Smith in his oral submissions.[7] Mr McAnally continued to oppose the application for an adjournment. He submitted that any relationship between Ms Muollo and the purchaser would not affect the matter if the sale price achieved was reasonable, and the evidence shows that it was. In those circumstances he advised that General Finance had no objection to the court taking into account on the summary judgment application the fact thatthere was an allegation from Ms Serepisos that a "close personal friendship" existedbetween Ms Muollo and the purchaser.[8] Having heard from counsel on the adjournment application, I gave an oral ruling refusing the application, save in one respect. I advised Mr Smith that I would be prepared to adjourn the hearing until 10.00am on 17 March 2017 to allow other counsel to be briefed for Ms Serepisos, if Mr Smith still considered that he could not continue as counsel. Having considered the matter further, Mr Smith then advised that he had come to the view that he was not precluded from appearing for Ms Serepisos. I accordingly directed that the summary judgment was to proceed, and I heard submissions from counsel on the substantive application. I advised that I would give reasons for my decision to refuse the adjournment application in myjudgment on the substantive application. Those reasons are set out at paras [68] to [76] of this judgment.Background[9] The claim arises out of advances made by General Finance to Ms Serepisos of $412,030 on 5 February 2014, and $62,200 on 16 May 2014. The total advanced ($474,230) was repayable on 5 February 2015.[10] The loan arrangements provided for interest at the rate of 21.45% (reduced to 11.45% if payment was made within seven days of due date). Interest was to be paid monthly, with a first payment on 5 March 2014. Ms Serepisos' obligations weresecured by a first ranking mortgage over the property.[11] It is common ground that Ms Serepisos failed to make interest payments under the mortgage, and failed to repay the advances when they fell due for repayment on 5 February 2015. In addition, Ms Serepisos failed to pay Wellington City Council rates, and General Finance incurred various expenses in enforcing its security under the mortgage.[12] General Finance issued a notice under the PLA in September 2014. There is no challenge to the validity of the notice, which expired unremedied. General Finance then set about the process of selling the property.[13] In an affidavit sworn in support of the summary judgment application, Mr Lockie, a director of General Finance, says that General Finance obtained a valuation report on the property in early November 2014. His evidence is that the valuation figure reported by the valuer was $750,000 on the basis of an open market sale by a vendor, but as little as $525,000 if sold at a mortgagee sale. A copy of the valuation report was not produced, but Mr Smith did not take any point about that. Mr Lockie says that the valuer subsequently revised the valuation figures to $700,000 on the basis of a sale by the owner, and $500,000 if sold at a mortgagee sale. Mr Lockie says that the valuer's downward revision of the figures was due tohigh Body Corporate charges for the property.[14] Mr Lockie's evidence is that the first offer received for the property was received on 2 April 2015, from a Ms Denard. The figure offered was $600,000, but the offer (which was not produced in evidence) was said to be "heavily conditional".It was rejected by General Finance. An offer of $390,000 from another party was also rejected.[15] Ms Denard subsequently offered $630,000, with settlement on 31 July 2015. That offer was accepted. Mr Lockie says that the higher offer from Ms Denard which General Finance accepted was, at least in part, facilitated by a provision in the contract that the property would be sold with vacant possession.[16] Prior to settlement General Finance asked Terry Serepisos, who had been a tenant in the property, to make arrangements to remove his personal effects so that the property could be sold with vacant possession.[17] On or about 14 July 2015 Mr Lockie says that General Finance found that Mr Serepisos had not removed his effects from the property. He says that there was concern that he would interfere with the sale to Ms Denard. For that reason, General Finance had the locks changed, to ensure that it could settle on 31 July 2015 with Ms Denard.[18] General Finance undertook repairs to a broken window at the property, and removed some personal effects (presumably those of Mr Serepisos or members of his family). It says that it incurred costs totalling $4,867.07 in taking those steps.[19] Unfortunately Ms Denard did not settle on 31 July 2015. Mr Lockie says that General Finance spent some time pursuing her in an effort to bring about settlement, but its efforts were ultimately unsuccessful. It eventually cancelled the contract and obtained a District Court judgment against Ms Denard for the deposit.[20] The amount of the deposit was not in evidence, but Mr McAnally told me from the bar (without objection from Mr Smith) that it would have probably been 10 per cent of the purchase price, or $63,000. The amount of the judgment has still notbeen paid and General Finance has recently commenced bankruptcy proceedings against Ms Denard.[21] General Finance continued to receive some offers on the property. An offer of $412,000 was received on 8 October 2015, and an offer of $550,000 was received on 12 November 2015. The latter offer resulted in a conditional agreement for sale at $590,000, but the conditions were not satisfied. A further offer for $400,000 was received on 29 March 2016. General Finance made a counter-offer of $580,000, but that was not accepted.[22] Eventually, on 3 May 2016, General Finance received a revised offer from the party who had offered the $412,000 in October 2015. The new offer was $580,000, and it was accepted by General Finance. This time no difficulties arose, and the sale was settled on 31 May 2016.[23] After deducting $54,580.55 from the sale proceeds to pay arrears of Body Corporate levies, and legal and other costs, the net proceeds received by General Finance following the sale were $497,989.49. Mr Lockie says that the application of the net proceeds of sale was the first amount received in reduction of the amounts owing on the advances, since 12 May 2014.[24] General Finance made demands for payment on 21 July 2015 and 30 August 2016. No payments were made in response to those demands.[25] The demand made on 30 August 2016 included a statement setting out details of debits and credits on the account. Largely as a result of the interest charges, the balance owing by Ms Serepisos as at 31 May 2016 was shown at $274,954.83.Ms Serepisos' opposition[26] Ms Serepisos denies liability for the amount claimed.[27] In her notice of opposition she made a number of allegations. First, she contends that General Finance failed to enforce the contract with Ms Denard, placing the property on the market again for sale instead of pursuing Ms Denard for an orderfor specific performance. Ms Serepisos contends that enforcement of the contract would have cleared her liability to General Finance, with some excess funds.[28] More generally, Ms Serepisos says that, from the taking of possession of the property (an apparent reference to General Finance changing the locks in or about April 2015) it took General Finance approximately 21 months to complete a sale. During that period General Finance remained under a duty to proceed with due diligence, to obtain the best possible price, and to enforce the contract with Ms Denard. The Denard contract proved to be the best possible price obtained, and General Finance should have pursued it to a settlement.[29] Ms Serepisos pleads that General Finance's failures resulted in a lost saleprice to her of $20,000, and further losses by way of accumulation of Body Corporate levies over a period of seven months (loss estimated at $54,580.55). She pleads that enforcement of the Denard contract would also have saved interest charged to her account from 31 July 2015, as that interest would have been recoverable from Ms Denard as losses flowing from her breach of contract. Interest charged by General Finance to Ms Serepisos in the period between 5 August 2015 and 31 May 2016 totalled approximately $133,000.[30] Ms Serepisos also contended in her notice of opposition that costs totalling $19,029.50 claimed by General Finance related in substantial part to the failure ofthe Denard contract and General Finance's failure to enforce it. She contended thatthe agreement she entered into with General Finance does not provide for recoveryfrom her of losses occasioned as a result of General Finance's own failures.The evidence filed by Ms Serepisos in opposition[31] The principal affidavit is that of Ms Serepisos' son, Terry Serepisos.Mr Serepisos confirms that he was the tenant in the property.[32] Mr Serepisos says that in about October 2014 he met with Mr Cairns, a director of General Finance. Agreement was reached that the property would be listed for sale through the real estate agent Paula Muollo of Harcourts Wellington. He says that he and Mr Cairns agreed that the property should be kept fullyfurnished, as he was still living there. He says that he and Mr Cairns agreed on a marketing proposal which Ms Muollo had prepared.[33] Mr Serepisos says that in April 2015 General Finance decided to change the locks, without his consent. He says that he was overseas at the time, and could not move his things out. He says that he did not receive any eviction notice.[34] At about this time, Mr Serepisos says that he was told of the unconditional sale for $630,000 to Ms Denard. He says that at that time the debt to General Finance was about $607,000. Accordingly, if the Denard contract had proceeded to settlement, there would have been no residual amount owing to General Finance.[35] When Mr Serepisos got back to New Zealand, he met with Ms Muollo, and she confirmed details of the sale. He says that he was told that the property was not then being marketed. The matter then dragged on for months without settlement.[36] Mr Serepisos says that by April/May of 2016 the property had not beenmarketed for almost a year. His evidence is that the last Harcourts' marketing was inJanuary 2015.[37] Mr Serepisos says that around this time (April/May 2016) he was approached by a friend, Mr Khusal, who said he had a friend who was interested in looking at the property. A meeting was arranged with Mr Khusal and the friend (a Mr Chin). Mr Serepisos says that prior to the meeting he had arranged for a valuation which had been done by Harcourts in 2014, showing a valuation figure of $955,000, to be provided to Mr Chin.[38] Mr Serepisos contends that it was "common knowledge that properties in New Zealand had gone up in value each year since 2014", and that Mr Chin wouldtherefore have known at the time that the value would likely be higher than $955,000.[39] Mr Serepisos says that he called Mr Schlatter from SAL Mortgages, and asked him to let Mr Cairns know that he had a serious potential buyer who would go unconditional immediately and settle quickly (subject to the buyer viewing the property). According to Mr Serepisos, Mr Cairns said he was not interested in showing this buyer through the property, and was not interested in talking to Mr Serepisos about it. Mr Serepisos' evidence is that Mr Cairns told Mr Serepisos to contact Ms Muollo, as she was the listing agent.[40] Mr Serepisos says that he then spoke to Ms Muollo, and told her that Mr Chin was prepared to go unconditional, but just needed to view the property. He says that Ms Muollo told him that she had not been in contact with Mr Cairns in months, and that she did not have a key to get into the property, as General Finance had changed the locks a second time.[41] Mr Serepisos says that he then contacted Mr Schlatter again, and asked him to relay the message back to Mr Cairns that Mr Chin could not be shown through the property as Ms Muollo did not have the keys. He says that Mr Cairns simply refused to speak to him.[42] Weeks passed by, and Mr Serepisos again asked Ms Muollo if she had the keys. She again told him that she did not.[43] Mr Serepisos says that when he pushed for the sale to Mr Chin at $800,000, the property was sold within a day or two to the eventual buyer. He complains that the eventual sale agreement was entered into without any notice to his mother or himself, in circumstances where General Finance was selling the property for a second time, one and a half years after the first sale and in a booming market, for $50,000 less than the sale agreement it had made with Ms Denard. Mr Serepisos contends that if General Finance had considered Mr Chin's offer, the sale would havenetted $220,000 more than what was achieved (in addition to the deposit to be recovered from Ms Denard on the first sale). He suggests that his mother would have come out with some equity if she had been treated fairly.[44] Mr Khushal, who has known Terry Serepisos for many years, says in his affidavit that on 5 May 2016 Mr Serepisos told him that the property was up for sale and could be purchased at a good price. Mr Khushal then contacted Mr Chin, whowas a friend of his, and told him that the property was "going at a good price, under valuation".[45] Mr Khushal says that he met with Mr Serepisos and Mr Chin at an address in Miramar on 5 May 2016. Mr Khushal describes his role as simply introducing Mr Chin and Mr Serepisos with regard to a possible purchase of the property. He says that he asked Mr Serepisos at the meeting to pass all of the information about the property to Mr Chin, and to do whatever was necessary to get a key, or otherwise arrange entry into the property so that Mr Chin could have a look at it.[46] Mr Khushal says that he was present when Mr Serepisos telephoned Ms Muollo. The telephone at the Miramar property was on speaker phone, so he could hear both sides of the conversation. He says that Mr Serepisos asked Ms Muollo to make available keys to the property, so access could be obtained to show it to a prospective purchaser. Ms Muollo replied that she had not had a key , nor access to the apartment, for some months (Mr Khushal believes that she may have said three months).[47] In his affidavit Mr Chin says that he had not met Mr Serepisos before the meeting on 5 May 2016. However he was interested in purchasing a property as a residence for his family. He says that he was shown photographs of the property atthe meeting, and also shown the Harcourts' 2014 appraisal of $955,000 for theproperty. He says that Mr Serepisos had a draft agreement for sale and purchase drawn up at the meeting, although it was not complete.[48] Mr Chin says that he was "very interested in the apartment", and that hewanted to proceed.[49] Mr Chin says that he told Mr Serepisos at the meeting that he would be willing to enter into an agreement, but it would be subject to him viewing the property and being satisfied with it. He says that he asked Mr Serepisos to provideaccess. It was then that Mr Serepisos telephoned Ms Muollo. Mr Chin confirms that the call was a conference call, and that he heard Mr Serepisos ask for a key and Ms Muollo's reply that she did not have a key.[50] Mr Chin says that "except that the price was not set in concrete at that meeting", he was willing to discuss an offer up to $800,000. He says that hisintention was to pay a deposit and then pursue mortgage finance. His evidence is that he had the ability to do a deal at that level. In support, he produced a statement of his assets and liabilities showing what appeared to be a substantial excess in the value of assets over liabilities.[51] Mr Chin says that he did not take the matter further, because he could not get into the property to inspect it.Evidence in reply for General Finance[52] There was one affidavit filed in reply, sworn by Mr Cairns.[53] Mr Cairns denies that he agreed with Mr Serepisos in 2015 that the property should be kept furnished. He says that he asked Mr Serepisos to remove his possessions from the property in May 2015 because General Finance had by then decided that its chances of securing a sale at a more favourable price would be improved if the property was sold on a vacant possession basis. When the personalitems were not removed, General Finance's solicitor was instructed to write to Mr Serepisos to ask him to remove his belongings. When Mr Serepisos did not comply with that request, General Finance removed his belongings and put them into storage. He said General Finance changed the locks as a result of a concern Mr Serepisos would interfere with the sale to Ms Denard.[54] In answer to Mr Serepisos' claims that General Finance failed to properlymarket the property, he confirms that he did agree with Mr Serepisos in the early stages that Ms Muollo should be engaged as the listing agent. He also confirms thathe and Mr Serepisos accepted Ms Muollo's marketing proposal.[55] Mr Cairns says that there were a number of reasons the property proved to be difficult to sell. First, it did not come with a carpark which Mr Cairns considered to be a negative for a property located in central Wellington. Secondly, Council consent had not been obtained for work recently carried out on the property. The property was also quite run down and dirty, and there were clear signs of deferred maintenance.[56] Mr Cairns also refers to the property as a "leaker", and potentiallyearthquake-prone. He says that the weathertightness issues were one of the reasons the Body Corporate levies for the property were as high as the figure of $30,000 per year then being charged.[57] Mr Cairns attached in support of those points an email dated 9 November2016 from Antonia Brown, Ms Muollo's manager at Harcourts, in which Ms Brown said (of the property): Selling monolithic, non-compliant, leaky places with high body corp fees and low earthquake ratings (and selling [them] twice) is something wecertainly need to get paid for. [58] He also produced an email dated 9 November 2016 from Ms Muollo, in which Ms Muollo expressed the view that " price wise we achieved a great price considering the defects for that maison penthouse ".[59] Mr Cairns says that General Finance was keen to sell the property as quickly as it could, because the costs of retaining it kept mounting. However a large number of potential purchasers were put off by these negative factors about the property. Even so, Ms Muollo still managed to bring in seven different offers over an eighteen- month period. Mr Cairns expressed the view that achieving an eventual sale at $580,000 was a good result, especially given the mortagee sale valuation figure of $500,000 which had been provided by the registered valuer retained by General Finance.[60] In response to Mr Chin's affidavit, Mr Cairns expresses surprise that Ms Muollo told Mr Serepisos that she did not have a key to the property. She regularly showed people through the property, and she did have a key. He says thathe does not know why she would deny having a key, although he had the impression that Ms Muollo became quite intimidated by Mr Serepisos. He speculates that she may have been avoiding any direct dealings with him at that point.[61] Mr Cairns says that General Finance has no record of Mr Chin making any attempt to contact anyone at General Finance direct, including himself, to obtain access to the property.Principles applicable to summary judgment applications[62] Rule 12.2(1) of the High Court Rules 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.[63] The court's approach to applications for summary judgment has been settledby a number of decisions of the Court of Appeal. In one of them, Krukziener v Hanover Finance Ltd, the court said:1The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, thatthere is no real question to be tried The Court must be left without anyreal 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 respondif the application is to be defeated The Court will not normally resolvematerial 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 isinherently improbable In the end the Court's assessment of the evidenceis a matter of judgment. The Court may take a robust and realistic approachwhere the facts warrant it [64] In Middleditch v NZ Hotel Investments Ltd the Court of Appeal stated that there must be a proper evidential foundation for a defence put forward as justifying1 Kruikziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162 at [26] (footnotes omitted).refusal of summary judgment. Requiring such an evidential foundation is not inconsistent with the onus the plaintiff carries, to establish that there is no arguable defence to the claim. A defendant must go beyond mere assertion that he or she has an arguable defence, and demonstrate on the pleadings and/or evidence before the court that the arguable defence asserted does exist.2 It is not sufficient for a defendant to speculate on possible defences which might emerge but for which no realistic evidential basis is put forward.3The issues to be decided[65] In his written submissions for the hearing, Mr Smith identified the following issues:(a) is it reasonably arguable for Ms Serepisos that General Finance failed to discharge the duty it owed under s 176 of the PLA to take reasonable care to obtain the best price reasonably obtainable for the property? If so, does that failure provide Ms Serepisos with a complete or partial defence to the summary judgment application?(b) is it reasonably arguable for Ms Serepisos that the delay (some 21 months) between General Finance taking possession of the property and the eventual settlement was so great that General Finance was in breach of a duty owed to Ms Serepisos to take reasonable care not to erode any equity she might have in the property (or increase her liability by way of additional penalties and costs)?(c) is General Finance entitled to recover costs incurred as a result of the default by Ms Denard under the first sale contract, and if so, are such costs recoverable from Ms Serepisos?(d) should the court decline to enter summary judgment in the exercise of its residual discretion?2 Middleditch v NZ Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.3 At 395.[66] At the hearing, Mr Smith confirmed that Ms Serepisos takes no issue over the amounts advanced to her or the terms of the advances, the breaches alleged by General Finance, or the validity of the notice issued by General Finance under the PLA. Mr Smith also acknowledged that his written submissions challenging certain costs claimed by General Finance have to be read subject to cl 7(f) of the Term Loan Agreement dated 5 February 2014 relied upon by General Finance.4[67] I will set out the reasons for declining Ms Serepisos' application for anadjournment, and then address each of the issues listed in para [65] above in turn.Reasons for declining adjournment[68] As set out at para [2] of this judgment, the application for an adjournment was not made until the day before the hearing. It was unsupported by any affidavit, and the matters on which Ms Serepisos wanted to adduce further evidence all appeared to be matters which she could have addressed in her affidavits in opposition. No explanation was given as to why that was not done.[69] As a general proposition, the courts will be wary of allowing late applications by debtors for adjournments in such circumstances. The essence of the summary judgment procedure is the prompt resolution of a claim in which the plaintiff deposesto its belief that the debtor has no defence, and that aim would be defeated, or at least hindered, if last-minute adjournments by defendants seeking to adduce further affidavit evidence were readily allowed (at least where no good reason was offered why the evidence could not have been put forward earlier).[70] Of course that approach must yield to the justice of the particular adjournment request, but I think it is an appropriate starting point.[71] Looking at the particular reasons advanced for the adjournment in this case, I was not persuaded that any of the matters proposed to be addressed in the4 Clause 7(f) provided:7(f) Costs of default are payable: All sums expended by the lender in the exercise of thelender's rights and the powers following a default or in exercising or enforcing or attempting to exercise or enforce any power, right or remedy contained or implied in this contract are payable by you to the lender upon demand. This clause does not limit any other term of this contract relating to costs; nor is it limited by any other such term.supplementary affidavit reached the threshold of justifying the adjournment sought. It was not explained how the production of the early Harcourts valuation of $995,000 might have assisted, when evidence of that figure was already in, and the market appeared to have been thoroughly tested. Similarly, expert evidence of the time usually taken to sell an apartment in Wellington would have been unlikely to assist. The Court is concerned with the sale of this particular apartment, and the evidence shows that General Finance did manage to sell it at a price which was well in excess of the figure its valuer had put on the property on the basis of a sale by themortgagee. There was also Mr Cairns' evidence of the property being a "leaker",with no carpark and without Council consent for work which had recently been carried out on it.[72] It was not explained how details of the commission paid on the (abortive) sale to Ms Denard might have assisted Ms Serepisos. General Finance would have had no option but to pay the commission, and it was improbable that a large commercial entity such as General Finance would have agreed to pay more than a proper market commission. In the absence of at least some indication that it did so, there was no sufficient basis for granting the adjournment.[73] The alleged sale of Ms Serepisos' personal chattels with the property was notpleaded in Ms Serepisos' notice of opposition, and no detail was provided until the application for adjournment. Mr Cairns' evidence was that Mr Serepisos, known tobe the tenant of the property, was asked to remove his personal chattels on 2 July 2015. When he did not do so General Finance removed the personal belongings itself and put them in storage.[74] Having regard to the fact that Mr McAnally had travelled from Auckland for the hearing, to the relatively modest size of the claim relating to the personal chattels, and the absence of any detail as to the particular chattels which are said to have been taken, I concluded that the costs involved in adjourning the summary judgment application to allow further affidavits on this topic, with interest running on the claim in the meantime, were not justified. If Ms Serepisos wishes to advance a claim that General Finance wrongfully took chattels belonging to her when it soldthe property, she should commence a new claim for that purpose (or a counterclaim in this proceeding).[75] The alleged "close personal friendship" between Ms Muollo and the eventualpurchaser of the property was not mentioned by Mr Smith in his memorandum seeking the adjournment, although he says it was brought to his attention two days before the hearing. Mr Smith became concerned about his own ability to continue toact in the matter (given the relationship his firm had with members of Ms Muollo'sfamily), and it may be that that is the reason he did not mention the "closefriendship" issue in his memorandum. In any event, Mr Smith was unable to tell meat the hearing when Ms Serepisos or Mr Serepisos first became aware of the alleged personal friendship, or to offer any explanation why the issue had not been raised with him earlier.[76] I concluded that the information Mr Smith was able to put to me did not reach the threshold of justifying an adjournment, particularly given the lateness ofthe application, and Mr McAnally's advice at the hearing that the Court may take into account the fact that Ms Serepisos has alleged, through her son, that there was a close personal friendship between Ms Muollo and the purchaser.5Issue 1: is it reasonably arguable for Ms Serepisos that General Finance failed to discharge the duty it owed under s 176 of the PLA to take reasonable care to obtain the best price reasonably obtainable for the property? If so, does that failure provide Ms Serepisos with a complete or partial defence to the summary judgment application?The law[77] Section 176 of the PLA provides:176 Duty of mortgagee exercising power of sale5 Mr McAnally's position was that any such relationship would not have affected General Finance's position. ANZ National Bank Ltd v Huo HC Auckland CIV-2010-404-1435, 17 August 2010, appears to offer some support for that proposition.(1) A mortgagee who exercises a power to sell mortgaged property owes aduty of reasonable care to the following persons to obtain the best price reasonably obtainable as at the time of sale:(a) the current mortgagor[78] In Public Trust v Ottow Asher J noted the following considerations in respect of s 176:6(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, whocan sell at any time in accordance with the mortgagee's convenience;(b) the mortgagee's duty of care is to take reasonable care to obtain thebest price reasonably obtainable at the time of sale;(c) it does not matter that the time may be unpropitious and that by waiting a higher price could be obtained;(d) a mortgagee is under no obligation to improve the property or increase its value;(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;(f) a mortgagee does not have any general duty to maintain properties prior to sale;(g) following the service of a notice under the PLA there is no duty on a mortgagee to keep a guarantor informed of sale activities;6 Public Trust v Ottow HC Auckland CIV-2009-404-3825, 4 November 2009 at [17] (footnotes omitted).(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; and(i) proper care must be taken to expose the property to the market and to obtain the best price reasonably obtainable.[79] The inquiry is fact-specific. The Court of Appeal has stated:7Whether there has been compliance with the s 176 duty will always be a question of fact and degree.Analysis[80] The allegations in respect of whether General Finance failed to discharge the duty under s 176 of the PLA are two-fold. First, it is suggested that General Finance should have attempted to obtain specific performance against Ms Denard, who defaulted on an earlier agreement to purchase the property. Second, Ms Serepisos contends that General Finance should have considered the interest of Mr Chin, who was prepared to pay up to $800,000 for the property.[81] Ms Serepisos' notice of opposition did plead that General Finance "failed to enforce the [Denard] contract". And Mr Serepisos noted in his affidavit that if theDenard contract had proceeded to settlement there would have been no residual amount owing to General Finance. However Mr Smith did not put much weight on this argument in his submissions, and I think he was right in taking that approach.[82] General Finance elected to cancel the contract when Ms Denard defaulted, but it did obtain a judgment against her for the unpaid deposit (the amount of which was not stated in the evidence, but is likely to have been around $63,000). General Finance has made no recovery on that judgment so far, and Mr McAnally advised me that it has now commenced bankruptcy proceedings against Ms Denard.7 Robertson v ASB Bank Ltd [2014] NZCA 597 at [30].[83] I accept Mr McAnally's submission that proceeding against Ms Denard forspecific performance may well have proved futile, and would likely have added further costs which Ms Serepisos would ultimately have had to bear.[84] In those circumstances I consider that Ms Serepisos has put forward no evidential basis for the Court to infer that there might have been a better recovery if Ms Denard had been sued for specific performance. Indeed, it seems more likely than not that the cost of pursuing a specific performance claim would have fairly quickly consumed the difference between the Denard sale price of $630,000 and the $580,000 for which the property was eventually sold.[85] Mr Smith's principal argument under this head was that General Finance should have followed up on the expression of interest made by Mr Chin, and that it breached its s 176 obligations when it failed to do so. Mr Chin has said in his affidavit that he was prepared to make an offer of $800,000 for the property, that sum being within his means.[86] If Mr Chin's expression of interest had been pursued, it could have resulted in a sale of some $220,000 over the sale figure that was achieved. But when Mr Chin'sinterest was brought to the attention of Ms Muollo, no steps were taken. There were three people who were privy to the relevant conversation with Ms Muollo about access to the property (Mr Serepisos, Mr Chin and Mr Khushal), and their accounts are consistent in saying that Ms Muollo declined to make arrangements to show Mr Chin through the property, ostensibly because she did not have a key. Ms Serepisos contends that General Finance "effectively sabotaged" the Chin offerby:(a) refusing to make a key available for Mr Chin to view the apartment;(b) refusing to show Mr Chin (a prospective buyer) through the property (as opposed to ignoring the request to view); and(c) refusing to enter into any conversation regarding Mr Chin's expresseddesire to negotiate (subject to a satisfactory view of the property).[87] Mr McAnally made the point that, as of 5 May 2016, General Finance had before it an increased offer from an earlier interested party that was acceptable to it, and this offer ultimately resulted in sale. He submitted that the prudent course for any mortgagee in that situation was to accept the actual offer before it, and notjeopardise that offer by exploring what might have been simply "talk" from Mr Chin.Mr Chin had not made a formal offer – it was only an expression of interest. Had General Finance turned down the ultimate purchaser at $580,000, only to find that Mr Chin was not prepared to proceed, that would have left Ms Serepisos in a worse position.[88] Mr McAnally submitted that the price of $580,000 was the best price reasonably obtainable at that time. He referred to the valuation report Harcourts had obtained (which put a valuation of $525,000 on the property on a mortgagee sale basis) which was substantially less than the price eventually obtained.[89] I accept Mr McAnally's submission that the price obtained was higher than the mortgagee sale valuation figure, and I accept that General Finance may have believed at the time that it was the best price reasonably obtainable. But the statutory obligation is to take reasonable care to obtain the best price reasonably obtainable as at the time of sale.[90] What constitutes reasonable care will turn on the facts of the case. In Apple Fields Ltd v Damesh Holdings8 McGrath J, delivering the judgment of the court, recognised that in some circumstances proceeding immediately to a sale would be indicative of a breach of the duty of care. In my view, it is at least arguable that this may be such a case.[91] The nature of Mr Chin's expression of interest is important in determiningwhether it could have been profitably pursued, and therefore whether General Finance was arguably in breach of its duty to take reasonable care in failing to do so.9 In his affidavit, Mr Chin says he was "very interested in the apartment and8 Apple Fields Ltd v Damesh Holdings Ltd [2001] 2 NZLR 586 (CA) at [50].9 That issue was relevant in Public Trust v Ottow, above n 6, where Asher J construed earlieroffers not to be "genuine, firm, unconditional offers from a third party that could profitably have been pursued" at [24].wanted to proceed", subject to viewing the apartment and being satisfied with what he saw. In a summary application such as this, I have no basis for disbelieving MrChin's evidence on this point.[92] In the result, Mr Chin's interest was never explored by General Finance,notwithstanding that it was aware of his interest. Mr Cairns did not deny Mr Serepisos' allegation that Mr Cairns "simply refused to speak to [Mr Serepisos]",and the uncontradicted evidence of Mr Serepisos is that he told Ms Muollo that Mr Chin "would go unconditional but just needed to view the apartment." Nor does Mr Cairns suggest in his reply affidavit that Mr Chin's interest came too late (ie thatthe property had already been sold to the eventual purchaser). No reply affidavit was provided from Ms Muollo explaining why Mr Chin was not at least shown through the property, and Mr Cairns could not explain why Ms Muollo would have told Mr Serepisos and Messrs Khushal and Chin that she did not have a key to the property. Mr Cairns stated unequivocally that she did have a key.[93] Mr McAnally advised me in the course of his oral submissions that I could take into account the fact that there is an allegation from Mr Serepisos that a "closepersonal friendship" existed between Ms Muollo and the purchaser of the property. While that allegation is not evidence, and Ms Muollo has not put her side of the story, I think that for summary judgment purposes at least it is appropriate to take into account the fact that General Finance has apparently elected not to respond to allegations made in the opposition affidavits which appeared to call for some response.[94] In the circumstances just described I think it would be dangerous to conclude that Ms Serepisos has no arguable case that General Finance breached its s 176 obligations to her. I think it is at least arguable that General Finance was responsible for the actions of Ms Muollo, and that the obligation to take reasonable care to obtain the best price reasonably obtainable at the time of sale extended to at least considering an expression of interest from a potential purchaser who was said to beprepared to "go unconditional" (if only to ensure that that potential purchaser wouldnot make an immediate offer which was better than anything already on the table). In this case there is evidence which, if it is accepted at trial, suggests that that sort ofconsideration may not have been given to Mr Chin's expression of interest. I thinkMs Serepisos is entitled to have that issue properly considered at a trial, with discovery of documents, and with witnesses available for cross-examination. I find for Ms Serepisos on the first question raised in issue (1).[95] Before concluding my consideration of the first part of issue (1) it is appropriate to make two comments on the evidence. First, I am conscious of thepossible danger of setting the bar too high for the discharge of a mortgagee's s 176responsibilities. With the benefit of hindsight many debtors would be able to point to something that the mortgagee might have done better in the sale process. But in this case there is the unusual feature of the mortgagee stating that the agent had full authority to show the property to prospective buyers, and had been given a key to the property for that purpose, while three witnesses have stated on oath that the agent told them that she did not have a key, and could not show a prospective buyer through the property. Mr McAnally submits that the sale price achieved was a fair market price, but I do not think that is the right question – the question is whether General Finance, through its agent, exercised reasonable care to obtain the best price reasonably obtainable. On that question I am not satisfied (on the limited evidence produced) that the question is beyond reasonable argument for Ms Serepisos.[96] The second comment relates to the position of Ms Muollo. She did not give evidence on the summary judgment application, and her story has not yet been told. Accordingly, I make no finding on the propriety or otherwise of her actions – the only findings I have made relate to the limited question of whether, on the evidence which has been produced, Ms Serepisos has raised an arguable defence, which should be allowed to go forward to trial.[97] I now turn to the second question posed in issue (i).[98] If it appears that the mortgagee has failed to discharge its duty under s 176 to exercise reasonable care to obtain the best price reasonably obtainable at the time of sale, the remedy for the breach is normally to set aside the sale and restore to theborrower his or her equity of redemption. If that remedy is unavailable, theborrower's remedy will lie in damages.10[99] Clearly the sale cannot now be set aside, so Ms Serepisos' appropriate claimis a claim for damages. The measure of those damages would be the difference between the price actually obtained and the price the mortgagee might reasonably have obtained.11[100] In this case the property was sold at a price of $580,000, but the net proceeds of sale, after paying outstanding levies and other outgoings, was $497,989.49. Ithink the highest Ms Serepisos' claim might be put would be on the basis thatGeneral Finance might have sold the property to Mr Chin for $800,000, probably with a slightly later settlement date. If that occurred, the same payments from the sale price would presumably have had to be been made, perhaps with some further deductions for additional levies or other outgoings. And there would probably have been a higher agent's commission on the sale. Realistically, there might have been anet figure available to General Finance in the vicinity of $710,000. On that basis,Ms Serepisos' claim would be for the difference between the net $497,989.49 recovered and the net $710,000 General Finance should have recovered — a loss of approximately $212,000.[101] I think that is the highest Ms Serepisos' claim could be put, and the evidenceshows that, as at 31 May 2016, the balance owing to General Finance on the loan was $274,954.83. Allowing a reasonable sum for further contingencies and ongoing interest, I am satisfied that if the sale to Mr Chin had gone ahead at $800,000, there would still be a shortfall owing by Ms Serepisos to General Finance of not less than $50,000. Having regard to the conclusions I have reached on issues (2)–(4), I am satisfied that Ms Serepisos has no arguable defence to General Finance's claim tothat extent,12 and that General Finance is entitled to summary judgment for that sum.10 Applefields v Damesh Holdings, above n 8, at [52].11 Skipton Building Society v Stott [2001] QB 261 (CA).12 Associate Judge Bell adopted a similar approach on the issue of the borrower's loss, inASB Bank Ltd v Ward [2015] NZHC 2909.[102] For completeness, I record that General Finance did not rely on any contractual provision which might have precluded Ms Serepisos from setting off a s 176 damages claim against the amount owing on the term loan.Issue 2: is it reasonably arguable for Ms Serepisos that the delay (some 21 months) between General Finance taking possession of the property and the eventual settlement was so great that General Finance was in breach of a duty owed to Ms Serepisos to take reasonable care not to erode any equity she might have in the property (or increase her liability by way of additional penalties and costs)?[103] In Contributory Mortgage Nominees Ltd v Harrison,13 this Court noted that, while the mortgagee has a wide discretion as to when to sell, on the facts of a particular case the decision of when to sell might still amount to a breach of the mortagee's equitable duty to act in good faith towards the mortgagor.[104] But in my view it is not reasonably arguable for Ms Serepisos in this case that the 21 month delay was excessive, and that General Finance was in breach of any duty it may have owed to Ms Serepisos in respect of delay. The evidence demonstrates that a number of offers were received throughout the 21 month period, and of course General Finance did succeed in obtaining a buyer at a price of $630,000 (Ms Denard), with settlement scheduled for 31 July 2015. The notice under the PLA had only been issued in November 2014, and I do not consider it reasonably arguable for Ms Serepisos that the delay before the Denard sale wasachieved was unreasonable. In saying that, I bear in mind Mr Cairns' evidence aboutsome of the negative aspects of the property, including no carpark, "leaky" issues,and the absence of a required building consent.[105] There is no basis in the evidence to attribute to General Finance any blamefor Ms Denard's failure to complete the contract on 31 July 2015, and I think General Finance must have been entitled to a reasonable period of time after that default to consider its options. Further offers were received in October and November of 2015, and in March 2016, but none of them resulted in a sale.13 Contributory Mortgage Nominees Ltd v Harrison (2005) 6 NZCPR 824 (HC) at [37].[106] It appears on the evidence that General Finance was actively marketing the property until it was eventually sold, and allowing for the difficulties arising fromthe property's negative features to which I have alluded I conclude that there is noevidential basis for Ms Serepisos' delay allegation. I accordingly find for GeneralFinance on issue (2).Issue 3: is General Finance entitled to recover costs incurred as a result of the default by Ms Denard under the first sale contract, and if so, are such costs recoverable from Ms Serepisos?[107] The Term Loan Agreement (the agreement) between the parties provided for the rights and powers of the lender on default. As outlined at footnote 4, clause 7(f) provided:Costs of default are payable: All sums expended by the lender in theexercise of the lender's rights and powers following a default or inexercising or enforcing or attempting to exercise or enforce any power, right or remedy contained or implied in this contract are payable by you to the lender upon demand. This clause does not limit any other term of this contract relating to costs; nor is it limited by any other such term.[108] "Costs" were defined in clause 12 of the agreement as follows:(a) Costs payable by you: You must pay to the lender upon demand,the lender's legal costs (as between solicitor and client) for:i. documentation: the arranging and preparation of this contract and registration of any security interest taken in conjunction with this contract and any variation or discharge or transfer in lieu of discharge of any security interest;ii. costs on default: legal services arising from or relating to any default under this contract or the enforcement or exercise or attemptedenforcement or exercise of any of the lender's rights, remedies andpowers under this contract including the giving or attempted givingof any notice under [the PLA] or any enactment in substitution for [the PLA], the inspection and valuation of the land and, if the lenderis a solicitor's nominee company, the cost of compliance by the relevant solicitor with the Solicitors Nominee Company Rules 1996or any similar rules in relation to the matters mentioned in this paragraph (ii));iii. costs of variation, waiver or change demand: dealing with any of your requests for a variation or waiver, change demand or other concession in relation to this contract;iv. legal costs of lender: legal services relating to the protection of thelender's security interest taken in conjunction with this contract(including the investigation of any claim relating to the land which might affect that interest).(b) Costs payable despite nature of lender: This clause appliesnotwithstanding that the lender may be a solicitor or a solicitor'snominee company.[109] Mr Smith argued in his written submissions that General Finance levied costs not covered by clause 12 of the agreement, totalling $8,812.60. However he did notrefer to clause 7(f) of the agreement. I agree with Mr McAnally's submission thatclause 7(f) permits recovery of the claimed costs. The costs were clearly incurred in the course of an attempt by General Finance to enforce its security, and in my view they fell within the clause.Issue 4: should the court decline to enter summary judgment in the exercise of its residual discretion?[110] I do not consider this is a case for the exercise of the court's discretion todecline to enter summary judgment. There are no special circumstances which might call for the exercise of that discretion, and General Finance is entitled to judgment in the ordinary way.Result[111] I enter judgment for General Finance in the sum of $50,000.[112] The balance of General Finance's claims are to proceed to trial in the usualway.[113] Ms Serepisos is directed to file a statement of defence within 15 working days of the date of this judgment.[114] Counsel may file memoranda on costs if they cannot agree. Any memorandum by General Finance is to be filed and served within 15 working days of the date of this judgment, and any reply memorandum for Ms Serepisos is to be filed and served within 15 working days of her receipt of General Finance'smemorandum.Associate Judge SmithSolicitors:Keegan Alexander, Auckland for the plaintiff