Australia and New Zealand Banking Group Ltd v 'Aukafolau [2009] TOLawRp 19; [2009] Tonga LR 221 (1 May 2009)

IN THE SUPREME COURT OF TONGA
Supreme Court, Nuku'alofa

CV 141/2008

Australia and New Zealand Banking Group Ltd

v

'Aukafolau anor

Andrew J
26 and 27 March 2009; 1 May 2009

Debt – claim to recover loan money – no economic duress found – judgment given to plaintiff

The plaintiff bank claimed to recover monies loaned to the defendants through a housing loan to both defendants. The amount claimed was $93,736.75 plus interest. Additionally there was a claim to recover an amount of $8,806.96 plus interest which concerned a personal loan to the second defendant. The two defences raised were economic duress, and the first defendant only claimed that became his name was removed under the agreement of the 28th April 2008 in terms of the housing loan, the agreement was only with the second defendant. The first defendant did not appear in the proceedings and elected not to attend and defend the claim.

Held:

1. There was no viable evidence of economic duress. Economic duress usually would only be available in relation to a variation of an existing contract brought about by an unlawful threat not to perform it. The defence of economic duress could not succeed.

2. The first defendant's name was omitted from the subsequent housing loan agreement (the initial agreement was executed in 2005). This was a mistake. The first defendant could not escape liability due to a genuine oversight of not putting his name on the agreement of 28th April 2008.

3. Judgment was given to the plaintiff against the defendants jointly and severally in respect of the housing loan in the sum of $93,736.75 plus interest at 15% per annum from 2nd October2008.

4. Judgment was given to the plaintiff against the second defendant in respect of the personal loan in the amount of $8,806.96 plus interest at 15% per annum from 2nd October 2008.

Counsel for the plaintiff : Mrs Tupou
Counsel for the defendants : Mr Taufaeteau

Judgment

This is a claim by the Plaintiff Bank to recover monies loaned to the Defendants through a housing loan to both Defendants. The amount claimed is $93,736.75 plus interest. Additionally there is a claim to recover an amount of $8,806.96 plus interest which concerns a personal loan to the second defendant.

I accept, as submitted, that both loans and terms of such are recorded in five written agreements. The Plaintiff produced three and the Defendant produced two in 2005 which was not in the possession of the Plaintiff due to the fires resulting from the events of 11th November 2006. The Plaintiff agrees that these two earlier agreements are not that relevant to these proceedings as the proceeds from these two loans were settled following an insurance payment as a consequence of a house fire.

Again I accept as submitted and which is not in dispute, that all loan agreements except for the agreement of the 28th April 2008 were relevant to a housing loan in the joint names of both defendants. The latter loan agreement was for a personal loan in the sole name of the Second Defendant which went on to record also the housing loan but where the Bank Officer who had prepared this document by oversight omitted to record the First Defendants name. This Officer gave evidence that she had failed to record the first defendants name which was an oversight but that it should have been recorded.

The Defendants raise two defences. The first defence is one of economic duress and the second, which is raised by the first defendant only, that became his name was removed under the agreement of the 28th April 2008 in terms of the housing loan, therefore the agreement was only with the second defendant.

Duress

The first defendant did not appear in the proceedings and elected not to attend and defend the claim.

On all of the evidence this case is nothing other than an everyday commercial transaction of lending and borrowing. There is no viable evidence of economic duress. Economic duress usually will only be available in relation to a variation of an existing contract brought about by an unlawful threat not to perform it. As stated there is just no evidence of any economic duress on the plaintiff's part. I accept the submissions of the plaintiff that

The second defendant in her evidence told the Court that the loan with the Plaintiff was to refinance a loan with the Westpac Bank of Tonga. She told the Court that she went to the Plaintiff Bank and made an application for the loan. There was no evidence to show that the Plaintiff induced the Defendants in any way to enter into the loan agreements. In fact, the Second Defendant told the Court that at the time she applied for the loan it was difficult because at this time there was a restriction on housing loans and she had to wait a while before her application for the loan was approved. Equally, there was no evidence to substantiate the existence of a threat in any form from the Plaintiff to induce the Defendants to enter into the loan agreements."

The defence of economic duress cannot succeed.

Whether the First Defendant is a Party to the Housing Loan

As stated, the first defendant's name was omitted from the subsequent housing loan agreement. The initial agreement was executed back in 2005 and that agreement was varied from time to time by the parties to include the first defendant's name. It was only when the personal loan which was to be in the sole name of the second defendant that the first defendants name was missed from the varied agreement which included the housing loan. Quite clearly this was an oversight on the part of the bank officer. It was a mistake. The first defendant was always a party to the housing loan.

The Plaintiff produced evidence to show that at no time had it intended for the housing loan to be taken over by the second defendant only. As stated, this was shown by bank statements on the housing loan account exhibit "F", diary notes "J" and demand letters "J", "K" and "L" and diary note "M". All documents record the joint names of the defendants. All of these documents were produced after the loan agreement of 28th April 2008. All the loan agreements were in relation to the same loan which named both defendants as the borrowers.

In these circumstances the first defendant cannot escape liability due to a genuine oversight of not putting his name on the agreement of 28th April 2008.

The loan agreements in respect of the housing loan was between the Bank and both defendants and the agreements of 15th January 2008 and 28th April 2008 were in fact variations of the agreement of 7th May 2007. The Defendants have breached the agreement by defaulting in their repayment.

The personal agreement was between the plaintiff and the second defendant and she has breached that agreement by defaulting in her repayments on the personal loan.

I give judgment to the Plaintiff against the Defendants jointly and severally in respect of the housing loan in the sum of $93,736.75 plus interest at 15% per annum from 2nd October2008.

I give judgment to the Plaintiff against the second defendant in respect of the personal loan in the amount of $8,806.96 plus interest at 15% per annum from 2nd October 2008.

Costs are awarded to the Plaintiff.