FUNG v WESTPAC NZ LIMITED COA CA857/2011

FUNG v WESTPAC NZ LIMITED COA CA857/2011 [26 July 2012]IN THE COURT OF APPEAL OF NEW ZEALANDCA857/2011[2012] NZCA 333BETWEEN RONNY CHEE HENG FUNGApplicantAND WESTPAC NZ LIMITEDRespondentHearing: 17 July 2012Court: Glazebrook, White and Simon France JJCounsel: Applicant in PersonB J Upton and L M L Lim for RespondentJudgment: 26 July 2012 at 3.30pmJUDGMENT OF THE COURTA The application for leave to adduce new evidence is dismissed.B The application to extend time within which to seek leave to appeal is dismissed.C The stay of execution of the High Court judgment is quashed.D The applicant must pay the respondent costs for a standard application on a band A basis increased by 50 per cent, together with the usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Simon France J)Introduction[1] Mr Fung applies for an extension of time within which to file an application for leave to appeal to this Court. Leave to appeal was declined by Fogarty J in the High Court, and the application to this Court for leave to appeal is out of time.1Mr Fung has also applied to lead fresh evidence in relation to the application if an extension of time is given.Background[2] Mr Fung borrowed money from Westpac to assist with the purchase of a vacant lot. The loan was arranged by a mortgage broker, Mr Goh. Mr Fung fell into default and the bank enforced its right under the mortgage. The mortgagee sale resulted in a shortfall of $59,000 and the bank brought proceedings to recover that sum.[3] Throughout Mr Fung has acted for himself, normally with the assistance of a McKenzie friend, Mr Lau. In the District Court Mr Fung testified, and advanced the argument that Mr Goh had made representations to him that Mr Fung would be able to obtain further borrowing. This further loan would fund construction on the site. It was the inability to obtain the loan and undertake the building work that Mr Fung says put him into difficulty. Mr Fung did not call the broker as a witness.[4] The District Court held that there was no relationship of agency between the bank and the broker, so any representations could not be visited on the bank.2Westpac obtained judgment. Mr Fung appealed.3 Fogarty J described the issue of agency as a crucial fact on the appeal and examined the evidence in considerable detail. In order to assess whether the case should be remitted for a fresh trial, Fogarty J made assumptions of fact in Mr Fung's favour. That done, his Honourconcluded that Mr Fung still had no case to prevent the bank enforcing the shortfall in the debt. Mr Goh was a broker, working on behalf of Mr Fung. He was not an1 Fung v Westpac New Zealand Ltd HC Auckland CIV-2011-404-2498, 17 October 2011.2 Westpac New Zealand Ltd v Fung DC Manukau CIV-2010-092-596, 28 March 2011.3 Fung v Westpac New Zealand Ltd HC Auckland CIV-2011-404-2498, 7 September 2011.agent of the bank. Further, no application for a construction loan was ever made by Mr Fung to the bank, so it could not be in default of any representation in not advancing a loan that was never sought.[5] A further strand to the appeal was that the bank sold the property at an undervalue. Although not raised in the District Court, Fogarty J nevertheless addressed the argument and held the bank had met its obligations in relation to the sale.[6] Finally, Mr Fung contended that the bank had breached the Fair Trading Act 1986 by changing its lending criteria. Mr Fung's contention is that this bothprevented him from obtaining a construction loan and lowered the value of the property. Fogarty J noted that even if one assumed there was merit in the claim, it could not assist Mr Fung to resist the bank's action unless he could point to anagreement where the bank committed itself to lending under the previous criteria. However, there was no version of the facts that would allow such a conclusion.[7] Mr Fung made an application to recall Fogarty J's judgment. Fogarty Jdeclined the application after an oral hearing.4The history of a further appeal[8] Mr Fung applied to the High Court for leave to bring a further appeal to this Court.5 Fogarty J noted that the issues to be raised on a further appeal would be the change in lending criteria and the agency issue. In addition, Mr Fung was adding an argument based on conflict of interest, such conflict being said to arise because Mr Goh risked losing some of his commission if the loan did not survive for 18 months. This claw-back arrangement is said to have meant that Mr Goh did not warn Mr Fung of impending changes to the lending criteria. Fogarty J repeated his view that even if one assumed Mr Goh had made representations, or given negligentadvice, neither of those could affect the bank's ability to pursue its claim. Leave wasdeclined.4 Fung v Westpac New Zealand Ltd HC Auckland CIV-2011-4042498, 22 September 2011.5 Fung v Westpac New Zealand Ltd, above n 1.[9] Mr Fung first attempted to seek the leave of this Court to appeal, following Fogarty J's refusal of leave, by filing documents in the High Court. Fogarty J issued a minute indicating any filing had now to be in the Court of Appeal, as the High Court no longer had jurisdiction.6 So on 1 December 2011, Mr Fung filed an application for leave to appeal in this Court. This was by now out of date, and accordingly on 19 December 2011 Mr Fung filed an application to extend time within which to file an application for leave to appeal. Also on 19 December Fogarty J issued a stay of execution of his judgment dismissing the appeal.7[10] The original stance of Westpac to these applications was that:(a) it did not oppose an extension of time. This was because it always knew of Mr Fung's intention to take matters further, and it could not point to significant prejudice; and(b) it opposed leave to appeal being granted because the intended appeal was without merit and arose in circumstances where significant costs had already been incurred in enforcing the debt.[11] At this point some comment is required on the nature of what Mr Fung has filed. Putting to one side the long and discursive documents originally filed in the High Court, the first document filed in this Court was "An Application Leave to aCivil Appeal by Introducing New Evidence(s)". It began by seeking three orders:(a) an application for leave to appeal Fogarty J's minute, issued after hisHonour's refusal to grant leave, pointing out that the High Court nolonger had jurisdiction;(b) an application to stay; and(c) an application "to introduce new evidence inform by Tony Goh/the mortgage broker, Appendix AK".6 Fung v Westpac New Zealand Ltd HC Auckland CIV-2011-404-2498, 23 November 2011.7 Fung v Westpac New Zealand Ltd CIV-2011-404-2498, 19 December 2011.[12] Appendix AK is a printout of an internet page for a mortgage broking organisation said to be connected to the firm for which Mr Goh works. The organisation lists as its partners SBS Bank, Sovereign, Tower and Westpac.[13] The appeal document next sets out information that Mr Fung says he has obtained from Mr Goh since the appeal hearing. It is claimed that this information shows the bank was not honest. The document then continues for a further 50 paragraphs, the contents of which seem to be a mixture of evidence, submission, and unrelated observations. Acknowledging that there are language issues for Mr Fung, the various documents that have been filed are very difficult to follow. As but one example, but in order to understand the steps subsequently taken in this Court, we set out an extract:27. Justice Fogarty need to aware even in the earthquake or Tsunami or fire, there is at least 2 seconds or more warning, where is the warning from the bank of the lending criteria changes?28. There is no logic by not giving warning from bank to me under common law.[14] Mr Fung next filed a document entitled "an application for extension of time to apply for leave to a civil appeal by introducing new evidence". The document largely mirrors that earlier filed.[15] More documents were filed until eventually on 7 March 2012 Harrison J issued a minute which recorded that Mr Fung had filed three applications – an application for leave to appeal, an application for extension of time and an application to lead new evidence.8 Harrison J described the applications andsupporting documents as "unintelligible", and pointed out the inability of the Court to determine any of them in their current form. He required Mr Fung to file a consolidating notice, specifying with clarity by reference to legal authority, the ground on which each application was to be made. Particular attention was to be given to the question of law or fact capable of serious argument on appeal to this Court.8 Fung v Westpac New Zealand Ltd CA857/2011, 7 March 2012.[16] Mr Fung responded with a document called "In Reply to Minute Harrison J dated 7 March 2012". It set out five issues. Three relate to matters arising from other proceedings being brought by the ANZ bank against Mr Fung. The document suggests links or discrepancies in both banks' approach in the two proceedings that require investigation. The remaining two issues first pose a question about the arrangements between the bank and the broker, and finally ask if the bank has been lying to the Court. Questions of fact and law purportedly reflecting these issues are then identified. There is no reference anywhere to the judgments of either the District Court or High Court.[17] Harrison J issued a further minute indicating that Mr Fung's document didnot comply with his minute.9 It represented a series of disjointed propositions which were unsuitable for judicial consideration. This new minute gave Mr Fung until 23 March 2012 to comply with the original minute and recommended Mr Fung seek legal assistance.[18] 23 March came and went. On 26 March counsel for Westpac filed a memorandum noting the time that had elapsed since these proceedings commenced in 2010. Westpac sought an order under r 6(2) that each of the applications be wholly set aside.10[19] Mr Fung replied by email on 10 April, seeking an extension of three months to engage the services of a legal aid lawyer specialising in the area of banking. Westpac filed a memorandum opposing this. The extension application was characterised as a delaying tactic and it was noted Mr Fung had had ample time since the outset to obtain legal assistance. It was noted there was a High Court stay in place.[20] On 18 April, in Harrison J's absence, Wild J issued a further minute.11 The application for an extension was declined. Harrison J's minute had made it plain the date of 23 March was a final opportunity. Wild J considered there was uncertainty over whether a single Judge could exercise the powers to set aside contained in9 Fung v Westpac New Zealand Ltd CA857/2011, 13 March 2012.10 Court of Appeal (Civil) Rules 2005, r 6(2).11 Fung v Westpac New Zealand Ltd CA857/2011, 18 April 2012.r 6(2), and so directed the matter be placed before the Court in the next available Miscellaneous Motions List. This was done.[21] At the subsequent hearing before us, Mr Fung again appeared with Mr Lau. Permission was given for Mr Lau to present the submissions, it being explained that Mr Fung would struggle with English because he was nervous in the environment. Mr Lau addressed the arguments that Mr Fung wished to make on the appeal.Decision[22] The Court remains in the position identified by Harrison and Wild JJ. There is no documentation before the Court that is in a format that could allow it properly to determine the applications. The case for acting under r 6(2) is strong, but since we heard oral submissions, which have clarified matters to a limited degree, we propose to first address those submissions.[23] As regards the application to extend time within which to seek a further appeal, no issue is taken over the delay in filing an application for leave to appeal. The only issue is whether there is merit in the intended appeal and so we turn to that. The test is well established:12(a) there must be a question of law or fact capable of bona fide and serious argument; and(b) the case must involve some interest, public or private, of sufficient importance to outweigh the cost and delay of a further appeal.[24] The matters Mr Fung raises are mainly issues that have been addressed in the High Court. The primary question would again be the issue of agency. Mr Fung has obtained two documents which he considers advance his case – confirmation that any commission Westpac paid a broker was subject to a graduated reduction if the loan was terminated within the first 18 months; and a document which sets out the standards Westpac requires before any commission will be payable to a broker.12 Waller v Hider [1998] 1 NZLR 412 (CA) at 413.However, neither assists Mr Fung's case, in that neither shows that in arranging theloan the broker was operating as the bank's agent. The application for leave to adduce these documents as new evidence is therefore dismissed as the evidence in them is not cogent.[25] It is also to be recalled that the evidence of representations made by Mr Goh is presently less than persuasive. Mr Goh was not called to give evidence, and Fogarty J, for the purposes of the first appeal, made assumptions in Mr Fung'sfavour as to what he might prove if given another opportunity. It is far from apparent that such an approach would be appropriate for a second appeal.[26] Mr Fung next raised the issue of the method by which the mortgagee sale was conducted. That had not been addressed at trial; Fogarty J allowed it to be raised on appeal and gave compelling reasons why the challenge failed. The main focus of complaint as put to us related to the suitability of the agent chosen, which is a peripheral concern at best. Mr Fung's written and oral submissions do not provide any basis for further analysis.[27] Other matters raised were the bank's failure to tell Mr Fung, ahead of informing the market, that its lending criteria were going to change, a claim for the first time of unilateral mistake, and a claim of breach of trust. This latter claim was another way of saying the bank should have told Mr Fung of the proposed change in lending criteria earlier so he could have sold the section when he had the chance. None of these claims has apparent merit, and the issue of an obligation on the bank to give prior advice to Mr Fung turns on whether the bank had entered into any contract or understanding with Mr Fung about a further loan. The lower courts have held there to be no such agreement.[28] The second consideration in granting leave to bring a second appeal is whether the case has a sufficient degree of public or private interest to justify a further appeal. There can only be one answer to this. The original claim is for $59,000, based on a shortfall under a mortgage contract that is itself not disputed. Westpac has faced hearings in the District Court, High Court (x 3) and now here. At no stage in this Court has Mr Fung filed correct or understandable documentation ormade any attempt to align his complaints with the tests that govern the grant of leave. The material filed and submissions made are characterised by a persistent recitation of unsubstantiated allegations of counsel or Westpac lying to the Court, being dishonest or being fraudulent. The application therefore also fails this limb of the test.[29] In conclusion, the Court, due to Mr Fung's persistent default even when put on notice, is in a poor position to assess the merits. Such understanding as we gleaned from the oral submissions, assisted by a consideration of the lower Courts'judgments, leaves us with the view there is no apparent merit in any of the grounds and the application discloses no hint of a public or private interest that might suggest a further appeal is desirable.Result[30] For these reasons the application to extend the time within which to file an application for leave to appeal is declined. The stay of execution granted by Fogarty J is quashed.Costs[31] Westpac sought increased or indemnity costs against Mr Fung on the basis that Mr Fung's conduct had caused it significant additional costs. In particular, Westpac points to Mr Fung's persistence in filing multiple applications despite being told of the hopelessness of his arguments by Westpac and Fogarty J. Westpac also submits that Mr Fung's failure to retain competent counsel has unnecessarily complicated the proceeding. We are satisfied that there are grounds for an order for increased costs under r 53E(2)(b) of the Court of Appeal (Civil) Rules 2005. In particular, it is clear that Mr Fung has failed to comply with the rules and the directions of the Court13 and has pursued arguments that lack merit.14 For these reasons we consider a 50 per cent uplift is warranted.13 Court of Appeal (Civil) Rules 2005, r 53E(2)(b)(i).14 Rule 53E(2)(b)(ii).Solicitors:Simpson Grierson, Auckland for Respondent