Complaining to the Banking Ombudsman and trespassing receivers from a workshop were of no effect against Bank of New Zealand’s claim to be owed $788,000 by Auckland manufacturer NZDMG Ltd and director Lili Dong. The High Court ruled BNZ receivers Deloitte were entitled to seize machinery on site which were security for BNZ’s loan.
NZDMG negotiated a five year Bank of New Zealand loan in 2018, with Ms Dong signing as guarantor. The High Court was told it defaulted on ancillary overdraft arrangements in 2020, triggering repayment of the five year loan and giving BNZ the right to seize twelve items of machinery used by the business and mortgaged to the Bank.
Deloitte staff were trespassed from premises in Ascot Avenue, Mangere, where the machinery was in use. Only a few machines were repossessed. The High Court was to later rule that the loan agreement gave BNZ and the receivers right to break into any premises occupied by NZDMG where machinery was held. Trespass notices were of no effect.
Ms Dong’s complaint to the Banking Ombudsman was not successful. She alleged BNZ acted oppressively, having failed to properly consider offers to repay. The Ombudsman decided BNZ had acted reasonably. There was a twelve month delay between NZDMG’s overdraft default and the Bank taking formal steps to call up all loans. During that time, the Bank was in negotiations with Ms Dong, but refused to accept her offer of rescheduled payments. BNZ said her business was in poor financial position prior to the dislocation of covid-19 lockdowns and lacked a viable business plan for any recovery. Rescheduling involved granting a further loan on top of loans currently not being serviced.
Ms Dong also alleged the overdraft facility was misrepresented by BNZ. It was offered as a temporary arrangement before being converted to a long-term government-guaranteed loan under a taxpayer funded business finance scheme, she said. NZDMG’s tax accountant told the court she provided reports and supporting documents for BNZ as part of an application for a $500,000 government-guaranteed loan, learning later the application was not approved. BNZ denied ever stating the overdraft would be replaced by a long-term loan. It had recommended NZDMG take steps to recover unpaid customer accounts and to apply for a government covid-19 wage subsidy.
Owens v. Dong – High Court (11.03.22)
22.055