TSB BANK LIMITED v A J WHELDALE [2013] NZHC 2799

TSB BANK LIMITED v A J WHELDALE [2013] NZHC 2799 [24 October 2013]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2013-404-001678[2013] NZHC 2799BETWEEN TSB BANK LIMITEDPlaintiff/ApplicantAND ALLEN JOHN WHELDALEDefendant/RespondentHearing: 24 October 2013Appearances: J Anderson for the Plaintiff/ApplicantA J Wheldale in person, the Defendant/Respondent togetherwith a McKenzie friendJudgment: 24 October 2013JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSENThis judgment was delivered by me on24.10.13 at 4:30pm, pursuant toRule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate[1] The plaintiff (the Bank) lent the defendant Mr Wheldale the sum of $228,000 on 4 February 2009 subject to the loan being secured by a first registered mortgage over Mr Wheldale's Trimdon Street property.[2] On 29 June 2009 the Bank lent Mr Wheldale $255,000 to be secured by firstregistered mortgage over Mr Wheldale's Sun Place property.[3] Each loan was recorded in a signed loan agreement which provided for fortnightly payments of principal and interest over a period of 30 years. Interest rate and default interest rates were detailed. In the event of default the Bank was entitled to demand payment of all its costs, charges, losses and expenses in connection with its exercise of its rights, powers or remedies, and including all legal expenses incurred on a solicitor and client basis.[4] Fortnightly payments fell into default. Notices of default issued and were served. The Bank obtained the power of sale in respect of each of the properties.[5] Both properties have since been sold by the plaintiff but for a lesser amount than the Bank calculates was required to be paid to it i.e. $243,937.11 in respect of the two properties. Interest continues to accrue from and including 19 March 2012 at a daily rate of $58.75.[6] The Bank seeks leave to apply for summary judgment and, if granted, the Bank seeks summary judgment upon its claim. In response Mr Wheldale has filed a notice of opposition. In support he has sworn an affidavit. He has also filed a statement of defence.[7] Mr Wheldale's grounds of opposition are, inter alia:(a) The Bank disposed of the properties "without due and proper consideration and care".(b) The matter should be referred for trial to properly investigate the actions of the Bank and its representatives in the sale processes.(c) That he has a good defence as his affidavit discloses.[8] By his affidavit Mr Wheldale explains:4. ...That my defence is not a simple one nor is it the typical defence as alleged by the Applicant, but rather it has substantial merit and justice will best be served if it is explored correctly, legally and otherwise an opportunity is given to the applicant and the respondent alike to be cross examined... rather than on the papers as traversed by the Applicant.[9] Mr Wheldale says that notwithstanding that HCR 12 permits these applications to be considered on the papers he has concerns of a general nature about the real estate and banking industries. He deposed:[8] ...Whilst the Real Estate Industry as well as the Bank Industry, are highly regulated and its conduct subject to scrutiny by the REAA and Banking Ombudsman alike, the applicant and its henchmen (real estate agents – Barfoot and Thompson in this case), are continuously violating this public trust to the detriment of individuals like myself, and other ordinary Kiwis, and hence with the help of its unlimited financial resources (and with respect) the legal firms, at hand, it has the ability to circumvent closer scrutiny by bringing applications such as the one before the Honourable Court and in so saying I believe this Honourable Court is obliged as custodian of the people to step in and put an end to this legal persecution at ground level.[10] Mr Wheldale then addresses aspects of the affidavit of Mr J A Kendall filed on behalf of the Bank.[11] Mr Wheldale submits it would "be prudent to cross examine Mr Kendallunder oath to determine the extent of his personal knowledge of and in the TSB filesas well to the modes operandie of the Applicant...".[12] Mr Wheldale asserts that during the process there was no communication with him at all. He says that the sale process was conducted without his consultation.[13] Referring to the Bank's registered valuation he says it was "wholly flawed tosay the least", because the valuer acknowledged "we have been unable to gain accessto the interior of the dwelling...".[14] As to the claims that the Sun Place property was a leaky building Mr Wheldale states:[9.4] ...I can categorically state that this property was not a leaky property, hence these issues were misconstrued deliberately and/or negligently by the Applicant and its agents in a bid to quickly dispose of the property and move onto the next...[15] Mr Wheldale refers to Barfoot and Thompson's appraisal for Sun Place of between $210,000 and $250,000. The registered valuers valuation estimated its value at $240,000. Despite this, a tender of $116,500 was accepted and according to Mr Wheldale the property was on-sold for $50,000 more on the same day.[16] Mr Wheldale believes "the same rush method was employed at Trimdon Street and no interior inspections were undertaken and no second opinions wereengaged".[17] Mr Wheldale submits that in light of the property boom it is unjust and inequitable to accept that the disposition of his properties by the plaintiff was reasonable and he believes that the Bank should be estopped from claiming theshortfall from him because that shortfall occurred due to the Bank's own negligenceand "deliberate malicious disposition" of his properties.[18] Mr Wheldale wishes to explore his rights to sue for the losses he has incurred.[19] Mr Wheldale refers to the affidavit of Mr Davis from Barfoot and Thompson who provided the estimates of value earlier referred to. He notes it was Mr Daviswho appeared to have introduced the notion of "leaky" home in relation to the SunPlace property. Mr Wheldale believes that a builder's report should have beenobtained.[20] Regarding claims that real estate agents and valuers were unable to obtain access to the properties Mr Wheldale comments that at a minimum cost they could have secured the services of a locksmith.[21] Mr Wheldale has familiarised himself with relevant provisions of the Property Law Act 2007. He does not believe there was adequate marketing of theproperties and that a "comparative market analysis" ought to have been obtainedfrom other real estate agents as well. He questions how the properties could have been sold so far below the value for which they were bought and for which the Bank provided funding, whilst there was a property boom.Considerations[22] Because the Bank did not seek summary judgment when it filed its statementof claim it requires the Court's leave to proceed by way of summary judgment. Inthe past the Court has taken the pragmatic approach of considering the leave application at the same time it hears the summary judgment application.[23] Upon the application for leave the Court has considered the following factors:(a) Issues raised by Mr Wheldale's defence are routinely disposed of bythe summary judgment procedure.(b) If the Court has any reservations about the quality of the evidence or the process by which properties are sold then it can defer matters for a trial hearing.(c) The summary judgment procedure provides an efficient and appropriate use of Court resources and time when compared to the process which is managed to a trial hearing.(d) Whilst considerations of delay and prejudice are frequently considered, these factors are much less likely to influence decisions against the use of the summary judgment procedure. To the contrary, the summary judgment procedure provides access to fairness of process and speed of disposition.[24] In this case the Bank's mortgages went into default because of Mr Wheldale'sfailure to pay rates or to meet his loan obligations. Section 119 PLA notices wereserved requiring the default to be remedied and identifying possible consequences if they were not.[25] Despite service of these notices the defaults were not remedied. MrKendall's evidence confirms the Bank appointed an established registered valuer andan established registered real estate agency to market and sell the properties.[26] A four week marketing campaign was conducted involving advertising and national publications, online advertising, and showing the property to interested parties.[27] On 27 July 2012 the Sun Place property sold by tender for $116,500.[28] On 22 August 2012 the Trimdon Street property sold by auction for $190,000.[29] The loan shortfall on the Sun Place property was $169,588.19. Upon the Trimdon Street property the shortfall was $74,933.78.[30] It is at the core of Mr Wheldale's case that the Bank as mortgagee breachedduties of care owed to him and the mortgagor under s 176 of the Property Law Act which duty was to obtain the best price reasonably obtainable as at the time of sale.[31] But, a mortgagee has no obligation to improve the property or increase its value. A sale for a price less than current market value does not of itself establish a breach of duty, although a large discrepancy may indicate a failure to take reasonable care. 1[32] There should not be undue speed to effect a sale as that might result in a lower price than could otherwise have been obtained.1 Public Trust v Ottow (2010) 10 NZCPR 879 (HC) at [17].[33] A real estate agent ought to sufficiently ensure the property is adequately marketed. The process in question is a commercial one and ought to be assessed accordingly.Conclusions[34] The evidence discloses that reputable and well recognised real estate agents and registered valuers were engaged by the Bank in relation to the sale of these properties. Marketing was conducted over a reasonably long period of time and involved extensive advertising and promotion. No questions have been raised challenging the conduct of the auction.[35] Whilst the sale prices were less than originally estimated the properties were sold by engaging a process which the Court believes satisfies the requirements of s 176 of the Property Law Act 2007.[36] Each property was marketed for four weeks under Barfoot and Thompson'sdirections; the Sun Place property was advertised 10 times in three different publications over four weeks; it received 1169 page views on Barfoot andThompson's website. The Trimdon Street property was advertised 8 times in three different publications over four weeks and received 809 page views on the website.[37] The Sun Place property was sold at tender which Barfoot and Thompson recommended because of the property was being regarded by enquirers as a "leaky"unit.[38] The defendant refused to allow access to the Trimdon Street property. Access was permitted to the Sun Place property. The Trimdon Street property sold for more than its value had been established and for more than its presale estimate.[39] Although the Sun Place property sold well below its valuation of between $190,000 and $205,000 that valuation was prepared on the basis that the property did not suffer from specific weather tightness problems, and the valuer not having viewed the interior. Barfoot and Thompson explain that because potential buyershad identified the problem as having weather tightness issues Barfoot and Thompson revised the likely sale price to $100,000. Mr Davis' evidence was that the problemsresulted in reduced interest and offers made took into consideration the costs of recladding the property.[40] At the end of the day and as it has often been said before, the property is worth what it was sold for and what it was sold for is what somebody was prepared to pay for it.[41] The Court accepts the submission of Ms Anderson that no purpose was served to the Bank by selling the properties for less than what they could have. Obviously the more the Bank could sell the properties for the greater will be their recovery of what was due to it.[42] Regarding claims that the Bank should have obtained a comparative market analysis the evidence discloses the Bank did obtain valuations and sale advice/reports from reputable and experienced real estate professionals. Also, there is no general obligation upon a Bank to obtain multiple valuations or marketing proposals in these kinds of cases.[43] Mr Wheldale has concerns for the integrity of the banking and real estate industries. But, as he notes, the processes of those industries are well regulated. In this case there was no evidence challenging the proprietary or the professional standards of the registered valuers or of Barfoot and Thompson.[44] Concerning Mr Wheldale's complaints of not being consulted through theprocess, the evidence indicates letters were sent to him at his address; process servers reported it appeared Mr Wheldale was trying to evade service indicating an attitude about attempts to contact him. In short, he was avoiding the Bank and its representatives.[45] Mr Wheldale commented that the valuer's inability to access the Sun Place property supports claims that the valuations were unreliable. However, and as MsAnderson points out, the inability to access the property was likely to have resulted in a higher, not lower valuation.[46] It appears clear that the Sun Place property was not on-sold at all on the day of the tender.Result[47] Neither the Bank nor its representatives breached the s 176 duty.[48] There being no other defence disclosed by Mr Wheldale's documents, theBank is granted leave to apply for summary judgment and is granted summary judgment upon its application.Judgment[49] Judgment is entered against Mr Wheldale in the sum of $254,570.86 inclusive of interest to date of judgment.[50] The plaintiff wishes to apply for solicitor/client costs. For that purpose the plaintiff is to file and serve a memorandum. Mr Wheldale thereafter has 10 working days to file and serve a response. The Court will then fix costs and advise the parties of these in due course.Associate Judge Christiansen