After learning annual income declared in support of a housing loan was nearly four times that reported to Inland Revenue, BNZ called up the loan despite mortgage payments being kept current. The High Court refused an injunction blocking the Bank’s mortgagee sale.
In 2023, Cambodian nationals Kimteav Lay and Bau Hoang purchased a family home at Flat Bush in South Auckland with Bank of New Zealand finance.
Soon after, an unidentified whistleblower told BNZ that financial information in support of their loan was false.
The family operates a bakery business in East Tamaki.
The High Court was told financial information provided to the Bank stated revenue for the 2021 financial year was $465,000 with a surplus of $318,000; 2022 $470,000, with a $337,000 surplus.
In comparison, tax filings with Inland Revenue reported markedly lower sales revenue for the two years; nearly one quarter that advised to the Bank.
BNZ demanded repayment, saying their loan application fraudulently represented their financial position.
In turn, Kimteav Lay and Bau Hoang said they were innocent victims of a fraud perpetrated by the person hired to prepare their financial reports.
They made a voluntary disclosure to Inland Revenue, updating their past tax returns disclosing greater income than previously returned.
They claim the Bank has not dealt with them ‘reasonably and fairly’ in seeking to sell their family home. They allege the Bank is in breach of the Fair Trading Act, acting unconscionably in its investigation and enforcement.
The Bank says its customers’ income position is, at best, opaque. Their credit risk is unknown.
Justice Jagose refused an interim injunction, intended to stop the mortgagee sale.
If the borrowers prove later in court they are entitled to damages, the Bank is able pay, he said.
Lay v. Bank of New Zealand – High Court (14.08.24)
24.195