WENYUE HE v BANK OF NEW ZEALAND [2023] NZSC 162

WENYUE HE v BANK OF NEW ZEALAND [2023] NZSC 162 [6 December 2023]IN THE SUPREME COURT OF NEW ZEALANDI TE KŌTI MANA NUI O AOTEAROASC 103/2023[2023] NZSC 162BETWEEN WENYUE HEApplicantAND BANK OF NEW ZEALANDRespondentCourt: Ellen France and Kós JJCounsel: G J Thwaite and F F Teh for ApplicantS A Armstrong for RespondentJudgment: 6 December 2023JUDGMENT OF THE COURTA The application for leave to appeal is dismissed.B The applicant must pay the respondent costs of $2,500.____________________________________________________________________REASONSIntroduction[1] The applicant, Wenyue He, has filed an application for leave to appeal from ajudgment of the Court of Appeal.1 The Court of Appeal dismissed the applicant'sappeal from a decision of the High Court entering summary judgment in favour of therespondent, Bank of New Zealand (BNZ), in the sum of $493,729.73 plus interest.2The judgment sum reflected the sum owing by the applicant to BNZ following amortgagee sale of an Auckland property owned by the applicant.1 He v Bank of New Zealand [2023] NZCA 381 (Collins, Lang and Woolford JJ).2 Bank of New Zealand v He [2022] NZHC 2128 (Associate Judge Johnston).Background[2] Loans totalling $3.21 million advanced to the applicant by BNZ were securedover the Auckland property. In late December 2016, the property was transferred fromthe applicant personally to the joint ownership of the applicant and a company,Bella Trustee 130701 Ltd (Bella), as trustees of the Queen's Trust. About a year later,in January 2018, Bella was removed from the Companies Register.[3] After a default in payments, BNZ took enforcement action under the mortgagein November 2018. A default notice dated 22 March 2019 under s 119 of theProperty Law Act 2007 was issued. The mortgagee sale which followed relied on thatnotice. BNZ engaged expert assistance in respect of the management of the mortgageesale process, the marketing of the property, and valuation. While the sales processproceeded, the property was tenanted and, despite attempts by BNZ's agents tofacilitate potential purchasers having access to the property, no access was availablethroughout the tender process.3[4] Six offers were received for the Auckland property in the course of thetendering process. The highest of these was for $1.915 million. A valuer had assessedthe value of the property in a forced sale, such as a mortgagee sale, at $2.1 million.Ultimately, after relisting the property and further negotiations, it was sold for$2.01 million on 7 August 2019. BNZ sought summary judgment for the balanceoutstanding under the loans.[5] In resisting summary judgment, the applicant relied on a pleaded counterclaim.He said that under the counterclaim he was entitled to an amount exceeding the sumsought by BNZ. Relevantly, the applicant contended, first, that BNZ had not properlyserved its notice under s 119; and second that, in the mortgagee sale process, BNZ didnot discharge its obligation pursuant to s 176 of the Property Law Act to takereasonable care to obtain the best reasonably available price for the property, therebycausing him loss. The Courts below rejected the applicant's claims.3 The Court of Appeal noted that there was no challenge to the finding in the High Court that theevidence suggested the applicant chose not to engage with requests that he assist in this process.[6] The argument about service had two main aspects. The first of these related tothe fact that, because the applicant was overseas at the time, BNZ had served thedefault notice on a Mr Yuan. Mr Yuan had been appointed by the applicant earlier asan agent for service and he had been referred to as the applicant's agent in the bulk ofthe loan documentation. Section 355 of the Property Law Act allows for personalservice on an agent where the person otherwise to be served is out of New Zealand.An agent is defined in the Act as a person having actual or ostensible authority toreceive the relevant document.4 In rejecting the applicant's argument, the Courtsbelow found that Mr Yuan at least had ostensible authority to accept service.[7] The second aspect of the applicant's case about service relied on the fact Bellawas not served. BNZ did attempt to serve Bella's registered office but then discoveredthat Bella had been removed from the register. The Court of Appeal did not accept theargument there was an obligation to serve the s 119 notice on Bella. That was becauseBella had by then been removed from the Companies register and was not therefore acurrent mortgagor on whom service was required. Nor was there any obligation toserve the Secretary for the Treasury under s 355(7) of the Property Law Act ascontended.5 That was because service on Bella was not required given it had nointerest in the property.[8] As to compliance with the requirement to take reasonable care, both Courtsfound that the applicant would be unable at trial to establish a breach of that duty. TheCourt of Appeal noted, amongst other matters, the availability of information aboutthe property on various websites and that the final sale price was not unreasonable. Itcould be reconciled with the original valuation BNZ received from the valuer.The proposed appeal[9] The applicant says that the question of whether service was effective raisesquestions of general or public importance or general commercial significance and thata hearing of the appeal is necessary to prevent a miscarriage of justice.6 Amongst4 Property Law Act 2007, s 358.5 The applicant states that, "for [him] this is only a side issue to the principal issue of service onBella".6 Senior Courts Act 2016, s 74(2)(a)–(c).other matters, he wishes to argue that the approach of the Court of Appeal to theadequacy of the service on Mr Yuan is inconsistent with the purpose of the serviceprovisions and results in a loosening of the service requirements. In terms of thefailure to serve Bella, the applicant's arguments would focus on various mattersincluding the width of the concept of ownership in the Property Law Act.[10] The key point the applicant wishes to raise in terms of the mortgagee saleprocess is that BNZ erred in not obtaining access to the property for viewing. Again,this issue is said to give rise to questions of general or public importance or generalcommercial significance and that an appeal is necessary to prevent a miscarriage ofjustice.[11] The proposed appeal would reprise the arguments considered by theCourt of Appeal. The resolution of those matters would turn on the particularcombination of facts raised in this case. There is no challenge to the principlesapplicable to the obligations of a mortgagee under s 176. No questions of general orpublic importance nor of general commercial significance arise.[12] Nor do we see any appearance of a miscarriage of justice as that term is usedin the civil context in the Court of Appeal's assessment of the facts.7 We add that indetermining that Mr Yuan had at least ostensible authority, the Court of Appeal alsomade the point that, in the applicant's dealings with the BNZ after service on Mr Yuan,no objection was raised then by the applicant about service. Further, as the respondentnotes, it is not disputed that at the time of the issue of the s 119 notice, Bella was nota registered company. Finally, as the respondent submits, the Courts below had thebenefit of evidence about the reasonableness of the final sale price.Result[13] The application for leave to appeal is dismissed.7 Junior Farms Ltd v Hampton Securities Ltd (in liq) [2006] NZSC 60, (2006) 18 PRNZ 369 at [5].[14] The applicant must pay the respondent costs of $2,500.Solicitors:Millennium Lawyers, Auckland for ApplicantSanderson Weir Ltd, Auckland for Respondent