WESTPAC NEW ZEALAND LIMITED v TUSCANY PROPERTIES LIMITED [2015] NZHC 184

WESTPAC NEW ZEALAND LIMITED v TUSCANY PROPERTIES LIMITED [2015] NZHC 184 [19 February 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2014-404-002420[2015] NZHC 184BETWEEN WESTPAC NEW ZEALAND LIMITEDPlaintiffAND TUSCANY PROPERTIES LIMITEDDefendantHearing: 16 February 2015Appearances: N R Frith for the PlaintiffJ L Foster for the DefendantJudgment: 19 February 2015JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSENThis judgment was delivered by me on19.02.15 at 4:30pm, pursuant toRule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateBackground[1] Westpac New Zealand Limited (Westpac) applies to place Tuscany Properties Ltd (Tuscany) into liquidation. Tuscany opposes.[2] On 29 August 2012 Tuscany entered into a term loan agreement with Westpac by which Westpac lent Tuscany $1,015,000.00. As security for the borrowings Tuscany executed an all obligations mortgage over a Rifle Range Road, Taupo property (the property). The property formerly operated as a motel and contained four residential townhouse units and a managers unit.[3] When Tuscany defaulted on its loan obligations Westpac served on Tuscany a s 119 Property Law Act 2007 (PLA) notice.[4] On or about 20 June 2014 Westpac sold the property as mortgagee. Following the sale Westpac says there is an amount of $584,992.32 plus interest owing.Tuscany's case in opposition[5] Tuscany's defence pleads that on 22 January 2014 Mr Barrie Brill, a director of Tuscany and a solicitor for the Brill Trust, together with Virginia Gomes, accountant for Tuscany and the Brill Trust, met with two managers of Westpac'sLoan Management Unit being Mr Yao and Ms Malcolm-Smith at Westpac'sAuckland office (the January meeting). Tuscany pleads an agreement was thenreached "upon a framework for completion of negotiations relating to repaymentof Tuscany's debt". It is pleaded the agreement (the January agreement) included terms:(a) The parties would continue to negotiate in good faith to bring to finality the repayment plan and other matters discussed at the January meeting;(b) The PLA notice would not be withdrawn but would be suspended on the basis it could be reactivated by one month's written notice ifnegotiations failed or if the defendant breached the terms of an agreed repayment plan;(c) The terms of a repayment plan were agreed subject only to approval by Westpac's credit committee of a written record of that plan. Theseterms include a provision for repairs to the property that wouldmaximize the recovery as recommended in a valuation dated 30September 2013;(d) Mr Brill would submit a written record of the terms of the repayment plan by 31 January 2014;(e) The managers would advise Mr Brill by telephone if they had any disagreement with the written record he had drafted;(f) The managers would submit the repayment plan to its credit committee for consideration at its meeting on 8 February 2015.[6] Tuscany pleads that on 28 January 2014 Mr Brill emailed Westpac with a"Heads of Agreement" (HOA). The email recorded:Attached is a draft Heads of Agreement which outlines a possible way forward. Please let me have your comments in due course.[7] Tuscany says Westpac did not express any concerns about the terms of the HOA or at all until in April, when Westpac through its solicitors, advised it had commenced marketing the property for sale by mortgagee tender. In response Tuscany requested Westpac to consider the HOA and proposed a meeting. Westpac'sresponse through its solicitors purported to reject outright the repayment plan recorded in the HOA.[8] Tuscany's case is that in breach of the January agreement Westpac;(a) Failed to have the HOA considered by its credit committee on 8 February 2014, or at all;(b) Failed and refused to negotiate in good faith;(c) Proceeded to a mortgagee sale without responding to the HOA;(d) Failed to give Tuscany one month's notice of its intention to reactivate the PLA notices;(e) Purported to reactivate the PLA notices when there had been no failure of negotiations and Tuscany had not breached the terms of the January agreement or the repayment plan agreed to at the January meeting.[9] Tuscany says that had the HOA proceeded as agreed the property would have sold for $1.2M which would have repaid the entire indebtedness due to Westpac. Instead the property sold for $500,000.[10] As an alternative defence Tuscany pleads that if the January agreement was not a binding agreement that nevertheless statements were made by Westpac's managers which amounted to representations as to Westpac's future conductincluding:(a) Westpac would reopen access to Tuscany's account so that revenuecould be paid into and expenses paid out of it;(b) That if a repayment plan was submitted in writing by 31 January 2014it would be favourably considered by Westpac's credit committee;(c) In the event the repayment plan was not to Westpac's satisfaction Westpac's credit committee would direct its managers to request changes and negotiate with Tuscany in good faith;(d) Westpac would reactivate the PLA notice if Tuscany failed to submit the proposal, or breached the terms of the repayment plan, or negotiations broke down;(e) Westpac would give Tuscany one month's notice before reactivatingthe PLA notice.[11] As a further alternative defence Tuscany says Westpac breached its duty of care as a mortgagee by failing to take reasonable steps to obtain the best price reasonably obtainable because:(a) Essential repairs ought to have been undertaken pre-sale to dispel thepotential for "leaky home" stigma;(b) The property was sold without prudent and reasonable steps being undertaken to render it fit for retail sale;(c) Westpac failed to reasonably prepare or present the property for sale;(d) The marketing and promotion of the property was directed to wholesale buyers then resident in Taupo, and but a small subset of the true potential market;(e) Inadequate resources were provided for the marketing and promotion of the property;(f) Westpac did not pursue negotiations with known interested parties including the Brill Trust which had agreed to purchase one unit at valuation and had expressed interest in other units on the property.[12] Tuscany pleads the sale should have recovered $1M rather than the $500,000 forced sale price obtained. Tuscany therefore seeks to set off the sum of $500,000 against any sum that might be found to be due by it to Westpac.Tuscany's evidence[13] Evidence in support of Tuscany's defence is provided by the affidavit of Mr Brill. His evidence is that the property was one of a number that Tuscany had acquired or obtained the right to acquire within the neighbourhood. In later years themarket and development considerations did not favour further development upon those properties.[14] A 2010 valuation of the property indicated a wholesale or block value of$1.2M. Mr Brill had discussions with Westpac's Taupo manager. Concerns arosesuggesting the buildings on the property may be affected by leaky home factors.[15] In July to September 2013 Westpac decided not to rollover the loans then expiring in September and transferred its Tuscany file to its Loan Management Unit in Auckland.[16] Other properties owned by Tuscany nearby did not sell at auction and on 23 October 2013 a PLA notice was served along with a letter from Westpac's solicitorsrequiring repayment of loans by 2 December 2013.[17] On 15 October 2013 a nearby property belonging to Tuscany was sold and in that outcome a sum of about $208,000 was repaid to Westpac.[18] On 26 November 2013 Mr Brill wrote to Ms Malcolm-Smith of Westpac'sAuckland office, suggesting a meeting to discuss the repayment plan. On 20 December 2013 Mr Brill wrote again to Ms Malcolm-Smith offering to purchase one of the units on the property.[19] On 22 January 2014 Mr Brill met with Ms Malcolm-Smith and Mr Yao atWestpac's Auckland office (January meeting). Mr Brill was accompanied by Ms Combes whom he said advised him that Mr Yao would have sufficient authority to negotiate the terms of a settlement but that any agreement reached would inevitably be conditional upon final sign-off by a more senior executive or a committee and that Mr Yao would only agree to terms he expected to survive that sign-off process.[20] Mr Brill says he and Ms Combes agreed their objective was to reach finalagreement with Mr Yao "so we would need to massage the terms until he was satisfied".[21] During the conversation Mr Brill reports Ms Malcolm-Smith saying that the PLA notice already issued would not be waived but merely suspended as long negotiations were going on and that if the negotiations failed or if agreements were not kept the bank would want to resurrect its power of sale without the need of re- serving a PLA notice.[22] Mr Brill reports replying that he understood and was happy for a resurrection right to be a condition of the negotiations, subject to reasonable notice being given.[23] Mr Brill says that discussions included referring to the possibility of his Trust purchasing two of the five dwellings on the property. He reports Westpac's position being that it would not accept any lengthy delays and that it would be better for Mr Brill's Trust to hold off until the bank's realisation program had concluded.[24] Referring to the 2013 valuation report obtained by Westpac for the purpose of guiding the process for realisation of the bank's securities, it showed a value of$800,000 for an immediate block sale into a dormant wholesale market. Mr Brill considered that assessment to be pessimistic and that it represented a considerable discount from the 2010 valuation.[25] As discussions continued Mr Brill reports Mr Yao saying "we are notinterested in a forced sale, except as a very last resort, that the bank accepted betterresults could usually be obtained if the mortgagor handles the sale process "in aframework that is agreed with the bank"."[26] Mr Brill recalls the managers saying that $800,000 was not enough to repay the bank in full and that they saw no reason why the security should be sold in bulk; that they would prefer to look at a planned sell down at retail prices as long as that could be done over a short period.[27] Mr Brill said there was a discussion regarding the valuation report's reference to exterior and interior maintenance, upgrading and tidying required.[28] Mr Brill reports the managers saying their key concern was with the servicing of the loan up to the point the last unit was sold; that the bank had limited tolerance for delay in dealing with problem loans and less tolerance for the problem becoming worse during those delays; and that they needed to see figures showing that revenue would consistently cover interest and other outgoings while the townhouse units were being refurbished until sold. Then there was discussion regarding the bank providing funding for refurbishing costs. Mr Brill says that discussion focussed on whether Tuscany could service a loan of $800,000 whilst repairs and subsequently unit sales were effected.[29] Mr Brill says Mr Yao said he would prefer to see any plan completed within 12 months and requested to sight a repayment plan "on an objective document ratherthan [upon] subjective expectations". Mr Brill said there would be "a firm deal forthe Trust to buy the managers unit and at least one townhouse". He said it wasagreed the loan would be restructured so that $200,000 would be repayable inFebruary 2015". Mr Brill said the managers reminded him that the bank couldresurrect its PLA notice if Tuscany breached any of the agreed terms. He responded that reasonable notice of any resurrection needed to be given and he said it was agreed that one month would be acceptable.[30] According to Mr Brill the January meeting then reviewed all points before Mr Yao and Ms Malcolm-Smith withdrew to confer. He said that on their return they said they were happy with the plan and were prepared to recommend it to the bank'scredit committee for final signoff. Mr Brill said the following process was agreed upon:(a) He would write up the plan that had been discussed;(b) The document would need to be in the hands of managers as soon as possible but not later than by the end of the month;(c) If the managers had any concerns about his wording of the record they would contact him by phone right away;(d) They would then apply the bank's internal analyses anddocumentation in time for the plan to be submitted to the credit committee meeting to be held on 8 February;(e) If the credit committee approved the proposal they would send him confirmation;(f) The committee might disagree with one or two of the terms or want to add additional terms and if so a further meeting could be set up to discuss those changes.[31] Mr Brill says that in a final discussion the managers said they expected the committee to accept the plan; that managers might take a bit of convincing to allow a full two years for sales and that the overdraft request (for building repairs) would raise some eyebrows but that they would probably look at the plan as an overall package rather than pick off pieces of it. Mr Brill says and Ms Malcolm-Smith mentioned the credit committee members sometimes had long agendas and it was possible that the Tuscany item would not be reached at the 8 February 2014 meeting.[32] Mr Brill deposes that over the course of the following week he drafted arecord of "the agreed repayment plan in the form of a three-way HOA between Tuscany and its two secured creditors" and that in doing this he "used notes [he] hadjotted throughout the meeting on the draft proposal [he] had with [him]".[33] Mr Brill is not now able to find those notes.[34] On 28 January 2014 he sent a copy of this document to Ms Malcolm-Smith as an attachment to an email. Copies were also sent to Mr Yao and Ms Gomes.[35] Mr Brill did not hear from the managers by 31 January. He assumed the agreement terms to be acceptable and that it was proposed to present it unchanged to the credit committee. When later by mid-February he had not heard from themanagers he assumed "the plan had slipped off the committee's agenda on8 February 2014".[36] Mr Brill says that also during February he had a phone call from a Mr Bland of Harcourts Taupo branch, who said he had been approached by Westpac a few months earlier but that it now seemed a mortgagee auction would not be proceeding.Mr Bland asked Mr Brill if he could list the units on Tuscany's behalf.[37] On 27 March Mr Brill received an email from Ms Banuelos of Westpac loansmanagement advising him that neither Ms Malcolm-Smith nor Mr Yao were anylonger handling the file. The email opened with: "This is just to follow-up on yourproposal for the settlement of the debt". Sometime later Mr Brill replied to MsBanuelos' email enquiring whether the actions of the managers were beingrepudiated. Ms Banuelos replied the managers were no longer available and thatthere was "no proposal held on file".[38] Mr Brill immediately responded providing a copy of the HOA earlier sent.[39] In the course of an email exchange that followed Ms Banuelos advised that Westpac intended to resurrect the PLA notice immediately on three specified grounds, namely:(a) Deterioration of the account.(b) Upon the assumption that no written proposal had been sent;(c) That Tuscany had not shown any figures that could service the debt.[40] Ms Banuelos had acknowledged there was an oral agreement. She said "thebank is not at all ignoring whatever was discussed and agreed in your January 2014 discussions[41] On 8 May Tuscany received a letter dated 17 April advising that themortgagee sale process had commenced. By email dated 24 June 2014 Westpac'ssolicitors advised all five properties had been sold for $500,000 with the advice:Feedback from interested parties to the real estate agent noted that significant work was needed to bring the managers unit back to a liveable condition and concerns were raised in relation to the plaster cladding whichis showing signs of moisture issues. These factors would have been taken by account by the parties submitting tenders.[42] Mr Brill says that the bank's agents, Harcourts, made no attempt to market orsell any of the units to retail buyers neither in Auckland or Wellington nor even in Taupo.[43] Regarding service of Westpac's statutory demand for a sum of $585,196.50Mr Brill responds that the sum was not paid because it was disputed and continues tobe disputed. Mr Brill says he has never received details of any calculations of a debtdue.[44] Mr Brill says neither Westpac nor its solicitors has ever offered any explanation as to why Mr Yao did not submit the HOA to Westpac's credit committee or how the bank's file came to be mislaid. He says he does not understand why arepayment plan that was acceptable to the bank in January was summarily dismissedin April. He believes the bank's communications with Tuscany throughout 2014have been well below any acceptable commercial standard.Westpac's evidence in response[45] Evidence from Westpac in response has been provided by the affidavits of Ms Malcolm-Smith and Ms Banuelos, both dated 27 January 2015.[46] Ms Malcolm-Smith deposes:(a) Mr Yao has since left Westpac and is in China and that neither he nor she had any authority to bind Westpac to any form of payment proposal and nor was any such representation made, but that it was clear any proposal would need to be approved internally at Westpac;(b) That Westpac's power of sale would be put on hold on a withoutprejudice basis while discussions were held and that if ongoing debt servicing could be committed to then Westpac could possibly look toforebear on the mortgagee sale while informally extending Tuscany'sexpired facilities on interest only terms;(c) That any proposal for repayment was to be put in writing to allow it to be reviewed formally by Westpac's credit authorities and that if anysuch proposal covered ongoing debt servicing and also improvedWestpac's position then it would likely be supported;(d) That at the meeting Mr Yao had noted that the proposal as discussed appeared to be a shuffling of debt that would result in a loss to Westpac;(e) That if the proposal was accepted and the restructured debt was still not able to be serviced then Tuscany would again be in default and the mortgagee sale of the property would likely recommence;(f) That Mr Brill agreed to submit a proposal early the following week.[47] Ms Malcolm-Smith deposes it was not agreed:(a) Tuscany's facilities would be restructured so that $200,000 would berepaid in February 2015;(b) Reasonable notice needed to be given prior to Westpac acting on its power of sale;(c) That the parties would negotiate in good faith;(d) That she would telephone Mr Brill if there were some deficiencies inany proposal submitted and nor did she agree to apply Westpac'sinternal analyses or documentation, as such did not exist.[48] Regarding Mr Brill's assertions of there being a "committee" within Westpac,Ms Malcolm-Smith says such was a colloquial term used to describe the seniormanagers and the loan management team who review such proposals and that they did not have a set of rules or procedures available for that purpose.[49] Ms Malcolm-Smith is firm that no binding agreement of any sort was reached either at or after the January meeting.[50] Ms Malcolm-Smith acknowledges receiving Mr Brill's email on 28 Januarytogether with a HOA. Because Ms Malcolm-Smith needed to take leave from workshe referred the matter to a fellow manager.[51] Regarding Mr Brill's proposal she says it was far from acceptable.[52] In her affidavit Ms Banuelos advises that when she reviewed the file she was unable to identify any record of Westpac having received a repayment proposal. Byher email to Mr Brill dated 27 March 2014 she wrote:This is just to follow up on your proposal for the settlement of the debtPlease note to send us your refinance proposal by no later than 4/4/2014as we are about to appoint an agent for the sale of the bank's remainingsecurities.[53] She also noted that Westpac would only defer any recovery action if accrued defaults were cleared and interest payments were maintained.[54] She said she did not receive any proposal by 4 April 2014. She says that having not received any proposal as at 4 April 2014 she instructed Westpac'ssolicitors to appoint Harcourt's Taupo to undertake a mortgagee tender program forthe property.[55] Mr Brill's response to Ms Banuelos on 29 April 2014 was that he had received no response to his proposal for three months; and he also queried whether Westpac intended to ignore the January meeting or his proposal.[56] Ms Banuelos' email response two hours later recorded, inter alia:(a) Tuscany had failed to ensure that its default position did not deteriorate;(b) Westpac had no proposal on file, nor had she received any response toher email dated 27 March 2014;(c) Mr Brill had been given a further opportunity to forward a proposal to refinance by 4 April 2014;(d) Westpac was not ignoring what was discussed at the January meeting;(e) That Westpac wished to exercise its power of mortgagee sale.[57] That same day Mr Brill forwarded her a copy of his 28 January 2014 email to Ms Malcolm-Smith. He said he was most distressed to learn that his correspondence of 28 January had been mislaid. He confessed he had misread the email of 27 March2014 and requested that "we set the clock back and" start again with Westpac's credit officers giving full consideration to the HOA.[58] Ms Banuelos deposes she had reviewed the HOA and determined it was unsatisfactory because it did not address Tuscany's present default position andbecause the time period over which the property were to be sold was too long. Forthese reasons she instructed the solicitors to write to Tuscany rejecting the HOA.[59] Ms Banuelos denies Mr Brill's claim that Westpac's decision to proceed to recover the debt remaining was "based on its unfounded belief that Tuscany had defaulted" on an agreement made at the January meeting. Ms Banuelos says Westpac never reached a binding agreement with Tuscany and that it remained clearthat any forbearance on pursuing Westpac's right was informal and without prejudiceto the expired Property Law Act notice.[60] Regarding Mr Brill's complaints of the mortgagee sale process, Ms Banuelosresponds:(a) Expert real estate sales people were engaged and the property was marketed both nationally and internationally as evidence supports;(b) Westpac considered carrying out repairs to the units but did not because there was no guarantee of obtaining a higher sale price;(c) Whilst Westpac was prepared to consider selling the property on a per unit basis the highest tender received was for the property as a singlesale;(d) The highest tender received was accepted.Tuscany's evidence in reply[61] In a reply affidavit Mr Brill notes that whilst Ms Malcolm-Smith's recordmade immediately after the meeting of 22 February 2014 appears broadly consistent with his own account he believes that it omits, significantly, the offer of the Brill Trust to have all of the revenue from its securities applied to servicing the bank loans throughout the sell down period. Mr Brill saw this offer as a major concession thattook care of the bank's worries regarding loan servicing.[62] Mr Brill says the two major points for discussion was Tuscany's request for a24 month period to allow for all five unit sales at a price that would fully repayWestpac, and that Westpac's further overdraft would provide a safeguard for loss of revenue during repair periods.[63] Mr Brill says Mr Yao finally agreed both terms improved certainties for the bank and that he would support them in the proposal to the credit committee. Mr Brill said Mr Yao expected the committee would accept the whole package but if they were to demure then both parties would agree that Tuscany would speed the sale process and tailor the renovation costs accordingly.[64] Contrary to Ms Malcolm-Smith's indication otherwise, Mr Brill said theentire purpose of the meeting was to discover which payment terms would be bothappealing to the Bank and achievable to Tuscany. Mr Brill adds that the meeting would have been a total failure if no consensus had been reached on those matters.[65] In his reply affidavit Mr Brill reiterates concerns that arose regarding blockage to access of accounts from which payments could be made – a blockage which Mr Brill said Westpac had undertaken to remedy, but did not.[66] Regarding Ms Banuelos' affidavit Mr Brill comments that the whereabouts ofthe Westpac file between January and May 2014 is unclear. He comments that as late as 29 April 2014 Ms Banuelos advised that her version of the file contained no record of the HOA and that she was clearly unaware of Ms Malcolm-Smith'sundertaking to unblock the account.[67] Mr Brill comments further that Westpac has not disclosed when it rediscovered Ms Malcolm-Smith's copy of the HOA or whether it was marked up or contained marginal notes.[68] Mr Brill queries the absence of Mr Yao's meeting notes.[69] Mr Brill queries also the reason why Westpac's solicitor's letter dated 17April 2014, advising that the mortgagee sale process would proceed, was notreceived until 8 May 2014.[70] Regarding Ms Banuelos' two reasons for her May 2014 decision to reject therepayment proposal plan, she advises the first was because she was unaware that Westpac had failed to unblock the relevant bank account from which payments could be made, and secondly that she was unaware that Tuscany was prepared to shorten the sales period that was preferred by the bank.[71] Mr Brill queries Westpac's failure to respond to the offer of the Brill Trust topurchase the managers unit at full valuation even though Westpac retains a record of that offer.[72] Mr Brill queries Westpac's acceptance of the $500,000 offer price on the tender date and without any attempt to further negotiations.Westpac's case[73] It is that Tuscany is insolvent and its defences are not substantiated by the evidence.[74] For Westpac it is submitted it is in controvertible that Tuscany defaulted on its obligations upon expiry of the term loan; that a Property Law Act notice was served which expired unremedied.[75] Westpac's case is that its officers met with Mr Brill and Ms Combes on 22January 2014 and that no binding agreement was reached and that a subsequent written proposal submitted to Westpac was unsatisfactory and was rejected.[76] Mr Frith for Westpac submits the property was sold by competitive tender upon acceptance of the highest of three tenders received; that the balance sought isthe amount short paid on Tuscany's term loan.[77] Westpac's position is:(a) It was not obliged to undertake any form of "essential repairs" or to take any "steps to dispel the potential for 'leaky' home stigma" as itwas open to Tuscany to maintain the security property itself;(b) It was not obliged to "adopt Operational Rules" or take other steps to render the security property fit for retail sale which could amount to significant improvements to it;(c) Westpac was not obliged to take any steps to "prepare or present" thesecurity property for sale nor to take steps that would amount to carrying out routine maintenance and improvement of the security property;(d) Westpac's officers expressed a willingness to consider any proposalthat might be put forward for the full repayment of Tuscany's debt, solong as the interest arrears were remedied and Tuscany's defaultposition did not deteriorate; that they did not agree to the terms of arepayment proposal subject only to "credit committee approval"because they were not authorised to do so.[78] Westpac's case is that on the basis of this analysis there is no bindingagreement having been reached at or after the January meeting. Accordingly, it follows, submits Mr Frith, that if no binding agreement was reached then settlement statements allegedly made by Westpac's officers at the January meeting did notconstitute representations much less those able to be relied upon by Tuscany.[79] Mr Frith submits there is no evidence of alleged representations and that the only documentary records of a January meeting are Westpac's which do not disclosea record of the alleged representations in terms pleaded.[80] Regardless, even if there were representations only two of those could havebeen actionable and those related to Westpac's ability to enforce its rights arising following the expiry of a PLA notice. In that regard Mr Frith submits that the clear documentary evidence is that Westpac's accrued power to commence the mortgageesale process was held in abeyance "without prejudice" and also that that forbearancewas "possible" if ongoing debt servicing could be committed to. Mr Frith submitsthat "without prejudice" in this context means that Westpac wished to preserve itsability to effect a mortgagee sale as it saw fit.[81] Mr Frith further submits that in any event the proposal submitted to Westpac by Mr Brill did not address ongoing debt servicing in a satisfactory manner and was rejected.[82] Regarding Tuscany's claim that Westpac failed to discharge its duty ofreasonable care to obtain the best price reasonably obtainable at the time the property was sold Mr Frith submits:(a) There is no evidence that Harcourts marketing campaign was directed to wholesale buyers then resident in Taupo; to the contrary there is evidence the property was marketed internationally.(b) Westpac engaged the services of an expert valuation firm and real estate agency, utilising the most expensive marketing schedule;(c) There is no evidence of any genuine firm offer having been made for the managers unit and neither was Westpac obliged to pursue negotiations in particular with the Brill Trust as there was no firm offer from which to negotiate;(d) Although a forced sale valuation of $680,000 had been provided the sum achieved of $500,000 was, in all the circumstances, the best price reasonably obtainable.[83] Westpac's evidence is that it obtained the services of expert valuers,experienced and respected real estate agents, having selected the most expensive and expansive marketing schedule suggested by its sale agents; that the security property was marketed in print and internet media, both nationally and internationally; and it was sold by competitive tender with the highest price accepted.Considerations[84] The evidence indicates Westpac engaged the process of discussion with thedebtor's representatives; that the discussion endured for about 2 hours whilst payment options were reviewed. In the course of which clear indications wereprovided by Westpac's Mr Yao regarding what might and might not be acceptable to Westpac, for which purpose Westpac agreed to receive a proposal for the consideration of other managers.[85] Whilst Westpac says there was no agreement that a month's notice would begiven before further PLA action was undertaken, it was clear from the evidence that there would be a consideration by other Westpac officers of the proposal Mr Brill had undertaken to provide. It was implicit therefore that notice would be provided to Tuscany in the event its proposal was rejected.[86] Westpac through Ms Banuelos wrote to and asked for a refinance proposal when not aware that Westpac already had one. In absence of a response to her email she, on behalf of Westpac, contacted Harcourts to commence the mortgagee sale process.[87] It is clear that as late as 29 April 2014 Ms Banuelos did not have a record of the HOA earlier provided to Ms Malcolm-Smith. The evidence is not clear as to when that originally provided copy was located again.[88] Although Ms Banuelos did not appear to have obtained Westpac's copy of theHOA as at 29 April 2014, she did on behalf of Westpac write to Tuscany in May providing reasons for rejection of the HOA.[89] Mr Frith challenges Mr Brill's recollections of the January meeting noting that although Mr Brill reported making extensive notes of that meeting, those cannot now be found. On the other hand Westpac has a record in the file note made by Ms Malcolm-Smith wherein no mention is made of Westpac providing one month'snotice before continuing with its mortgagee sale process.[90] As Mr Frith acknowledges there is considerable dispute about what was and what was not said at that January meeting. He believes Tuscany's real concern isabout the process that Westpac adopted after the January meeting and not so muchabout the terms of Tuscany's proposal. It is Mr Brill's evidence that when he sentthe proposal it was agreed Westpac would contact him if any issues were raised regarding its terms. Westpac denies this and Ms Malcolm-Smith's record does not support Mr Brill's claim. Mr Frith urges that if credibility issues arise then thoseought, in the context of the present hearing, be resolved by reference to the written record.[91] Regarding Mr Brill's claims that access to his bank accounts was blocked by Westpac, Mr Frith suggests that Mr Brill should have tried other methods than by email to bring the blockage to the attention of Westpac.[92] Central to Westpac's position is Ms Banuelos' email to Mr Brill dated 27March 2014. That said the Bank would only defer its recovery action if debts were cleared and that if Tuscany wished to refinance those debts it was to confirm timeframes involved and the level of funding that would be available to Tuscany.She concluded by requiring Tuscany's refinance proposal no later than one weeklater as agents were about to be appointed to sell the property.[93] Mr Frith submits that the reference to "refinance proposal" is in reality arequest for repayment.[94] Ms Banuelos' email dated 29 April complained there had been no response toher earlier email. She required a satisfactory proposal to be forwarded to Westpac if it was to consider deferment of sale action. One week later Westpac's solicitorsemailed Mr Brill and advised that the proposal contained in the HOA (sent on 28 February 2014) was rejected.[95] It is Westpac's position it has considered and it did reject the HOA. Insummary Westpac's position is that there was no agreement and therefore no breach occurred, but Westpac did review Mr Brill's proposal as it said it would, albeit laterthan it said it would.[96] Westpac rejects assertions that its bank officers indicated they would accept those terms, and there is no documentary evidence to indicate otherwise.[97] As to what occurred at the January meeting the Court should, Mr Frith submits, accept Ms Malcolm-Smith's report and not accept that account of Mr Brillwhere that varies from the Westpac record.[98] Mr Frith submits there was no agreed process and therefore there was no agreement and in those circumstances no claim of a set off can arise. Likewise if there was no binding agreement any claim that Westpac is estopped from relying onan expired PLA, must fail. In any event, it is Westpac's position that claims that itwould provide one month's notice before reactivating the mortgagee sale process,amounts only to a representation of a forbearance provided on a "without prejudice"basis. Also Westpac says that because it provided Mr Brill with another opportunity to submit another refinance proposal, it was not unconscionable for the bank to act as it did by instructing real estate agents to proceed with the sale.[99] In response to Tuscany's claim of losses incurred by the mortgagee saleprocess utilised, Mr Frith submits there was no evidence to support claims of detriment suffered. He submits other claims of failure on behalf of Westpac were contrary to case authority regarding the sale obligations of a mortgagee.[100] Regarding Mr Brill's claims that the Brill Trust was prepared to purchase themanagers unit and at least one other residential unit on the property, Mr Frithsubmits there is no record of a "firm offer", and that nothing less could have obliged Westpac to pursue that offer further.Conclusions[101] The evidence is that Tuscany has no significant debts other than that claimed by Westpac. Therefore its insolvency is not an issue beyond those matters for consideration today.[102] Even if a company is considered to be insolvent, the Court retains a discretion to refuse making an order for liquidation.[103] Issues between the parties focus on the January meeting and about whether an agreement was reached and if it was then it is about the extent of those terms agreed to.[104] Westpac's position is its written account should be preferred. Ms Foster for Tuscany urges caution with adopting that review of matters. She points out that two other bank officers also received Mr Brill's HOA and there is no report from eitherof them.[105] Ms Foster invites the Court to view cautiously the aforesaid April email of Ms Banuelos. The Court agrees there is proper reason to do so.[106] The opening sentence of that email notes:This is just to follow up on your proposal for the settlement of the debt[107] Then later:I note that you may have forwarded a proposal to the prior manager Justine Malcolm-Smith and to Chris Yao.[108] The email then in its concluding paragraph requests the sending of a refinance proposal by 4 April.[109] It is clear Ms Banuelos had not sighted the 28 January HOA. Ms Foster is correct in her assessment that the frustrations contained by her email were indeed thebank's responsibility. Mr Brill sent the proposal. He says it incorporated what hesays would be acceptable to Westpac. Ms Foster asks, what is the point of a lengthy meeting except to discuss what might work for both parties.[110] Clearly other managers had to view and approve that proposal but it is clear that any decision upon it should have been made in the context of what was discussed which included, according to Mr Brill, reference to mortgage service requirements being met by the Brill Trust.[111] In an initial report of Ms Malcolm-Smith dated 13 February 2014 she noted:He has mentioned that remedial works and forming a proper body corporate should be undertaken prior to a sale to maximise return – we can't reallyprovide any further funding, but forbearance terms that placed existing debt on interest only (if he could service) and sell the property would be ok (tho this is not quite what he is proposing). An IAP is going to be required no matter what we do, and total time for any work after may be too long, with the Taupo market not looking to improve in the near future, position could deteriorate further.[112] The Court agrees with Ms Foster that this account does not suggest any response to the January proposal, and indeed appears to indicate support for a proposal for a sale of the property by Tuscany.[113] But, Mr Brill never received a response.[114] Ms Banuelos' email for a proposal seems to take a different approach, for it is clear at the time that she had not sighted that document received by three other bankofficers on or about 28 January. She said she was ignoring what was said in January,but how could she do that without knowing at all what had been sent.[115] Then it appears from the evidence that Ms Banuelos had on her own and without discussion with anyone and certainly without reference to any other person, made a decision declining the proposal which decision Mr Brill did not receive until 29 April.[116] Ms Foster submits the bank's behaviour as 'wanting'.[117] In the Court's view the truth of what happened cannot be determined by filenotes or affidavits but ought properly to be examined upon the hearing of oral evidence.[118] The liquidation application before the Court does not provide an appropriate opportunity for considering that evidence.[119] If the Court is to refuse the liquidation application then it must accept there is a clear and persuasive argument in opposition to claims that a debt is due. The Court is not required to determine that disput, merely that it believes that opportunity for determination ought to be provided.[120] While this conclusion probably renders further discussion about the mortgagee sale process redundant for present purposes, the Court makes the following observations:(a) It appears accepted that a mortgagee has no obligation to repair a property for sale. In this case there is evidence that a debtor and a related company were prepared to prepare the property for sale at a higher value;(b) That they had advised Westpac further time would be required andearlier on Westpac's officers were aware of this.[121] Westpac says it was under no obligation to consider offers of purchase by the Brill Trust because of uncertainty about those. No further conclusion needed to be reached in that regard but some enquiry could be made about why that option was not pursued further, particularly having regard to the very significant shortfall which occurred in the outcome of the mortgagee sale.Judgment[122] The application for liquidation is dismissed.[123] Westpac shall pay Tuscany's costs on a 2B basis. If counsel cannot agreeupon these then brief submissions are to be filed.[124] The Court considers it appropriate to make orders regarding the filing of proceedings for a determination of matters in issue. Counsel are to file memorandawithin 10 working days of receipt of this judgment reporting on their discussionsregarding their suggestions for orders to be made.Associate Judge Christiansen