ANZ Bank New Zealand Ltd v Bushline Trustees Ltd

ANZ Bank New Zealand Ltd v Bushline Trustees Ltd [2020] NZSC 71 is a New Zealand Supreme Court decision about an alleged pre-contract pricing promise in a major rural lending deal.

Bushline said ANZ had agreed to keep a 0.7 per cent lending margin fixed for five years. ANZ said no such promise was made. The signed loan agreement gave Bushline a 12-month loan and said the margin was reviewable at any time. The Supreme Court held Bushline had not proved the alleged five-year commitment.

For business owners, the case is a strong reminder that a critical finance term should be written clearly into the final signed papers. If the documents say something else, and the alleged promise is raised much later, the proof problem can be severe.

Bushline was a substantial dairy farming operation run through two trusts in partnership. The Coomeys were central to the business, but the legal borrower was Bushline, not the Coomeys personally. That mattered because the trusts also had professional trustees involved, including a lawyer and an accountant.

By early 2008, Bushline already had significant debt with ANZ. It then moved to buy a Waverley farm for $7.25 million. ANZ approved lending for that purchase in late February 2008, and Bushline entered into an unconditional sale and purchase agreement the next day.

At the same time, Bushline was considering refinancing with other banks, including ASB and possibly BNZ. ANZ saw Bushline as a significant customer and wanted to keep the relationship. That commercial pressure formed the backdrop to the key meetings on 18 and 19 March 2008.

Those meetings involved Mr and Mrs Coomey for Bushline and Christopher Harvey and Robert Simcic for ANZ. There was no real dispute that ANZ agreed to lend on a floating BKBM basis with a 0.7 per cent margin. The fight was about duration. Bushline said ANZ also committed to hold that margin for five years. ANZ denied that.

In April 2008, the formal loan agreement was signed. ANZ advanced $19.466 million for a 12-month term. The interest rate clause said the 0.7 per cent margin was reviewable at any time. The loan was accompanied by three related swap transactions. Those swaps were part of the wider background, but the remaining issue in the Supreme Court was narrower than the earlier litigation as a whole.

Years later, after ANZ reviewed the margin and the relationship had deteriorated, Bushline sued. The case originally covered a wider set of allegations about the loan and swap arrangements. But by the time the matter reached the Supreme Court, the live issue was whether ANZ had in fact agreed or represented that the 0.7 per cent margin would be fixed for five years.

The Supreme Court’s main task was a factual one. Did the evidence show, on the balance of probabilities, that ANZ agreed or represented at the March 2008 meetings that Bushline’s 0.7 per cent margin would be fixed for five years?

That question mattered because the signed loan agreement pointed the other way. It gave Bushline a 12-month loan and said the margin was reviewable at any time. If Bushline could prove the alleged five-year commitment, further issues would arise about whether ANZ was still bound despite the written terms and an entire agreement clause, and whether the claim was out of time.

The Court also had to consider the proper role of an appellate court when the High Court trial judge had already heard the witnesses and made factual findings. The High Court had rejected Bushline’s case. The Court of Appeal had reversed that finding. The Supreme Court had to decide whether there was a proper basis for that reversal.

The Supreme Court allowed ANZ’s appeal and restored the High Court decision. It held that Bushline had not established, on the balance of probabilities, that ANZ agreed to fix the 0.7 per cent margin for five years or made a representation to that effect.

The Court accepted that Bushline wanted a five-year commitment and that matching a competing offer was part of the commercial context. But wanting a term is not the same as proving the other side agreed to it. The Court said the evidence did not get Bushline over that line.

Because Bushline failed on the core factual issue, the Supreme Court did not need to decide the remaining questions about the entire agreement clause under section 50 of the Contract and Commercial Law Act 2017 or ANZ’s limitation defence.

The Court made no award of costs in the Supreme Court. It also reserved leave for any party to apply for an order dealing with costs in the courts below within 20 working days of the judgment.

The judgment is especially useful because it shows the kinds of proof problems that can defeat a business claim about an alleged side promise.

First, the signed documents were a major obstacle. The April 2008 loan agreement said the margin was reviewable at any time and the loan term was one year only. If a five-year pricing lock was essential, the Court considered it surprising that the final papers did not reflect it.

Second, the Court placed weight on the fact that Bushline’s professional trustees and legal adviser did not know of any such five-year commitment. Mr England was a lawyer and trustee. Mr Schurr was an accountant and trustee. The Court thought it unlikely that such an important promise would not have been raised with them, especially when they were signing documents that said something different.

Third, later conduct counted against Bushline. The Court said there were many indications that the parties dealt with each other over the years on the basis that no five-year commitment had been made. Bushline entered into later refinancing arrangements at rates other than BKBM plus a 0.7 per cent margin. The Court said that, even if Bushline was in a difficult position, that would not have prevented it from trying to enforce a contractual term if one existed.

Fourth, timing in the pleadings mattered. Bushline started proceedings in May 2014. An amended statement of claim followed in November 2015. Neither expressly alleged a representation or undertaking to fix the margin at 0.7 per cent for five years. That allegation first appeared in a further amended statement of claim filed in September 2016. The Supreme Court disagreed with the Court of Appeal’s view that this was not of particular significance.

It said the delay in raising the alleged five-year commitment counted against its existence.

Fifth, the way the case was run at trial mattered. Mr Simcic accepted that Bushline was seeking a five-year commitment to match a competing ASB offer. But it was not put to him in cross-examination that he had actually agreed, on ANZ’s behalf, to match such an offer by fixing the margin for five years. The Supreme Court said that failure undermined Bushline’s ability to prove its case.

The Court also referred to evidence from ASB and BNZ that they were not offering the terms Bushline later alleged. At the very least, the Court said, those factors meant Bushline had not proved the alleged commitment on the balance of probabilities.

This case is a good example of how courts test an alleged oral promise against the surrounding documents and later behaviour.

The loan agreement was central. It did not just omit a five-year margin commitment. It positively said the margin was reviewable at any time, and the loan itself was for 12 months. That made Bushline’s alleged oral case harder to prove.

The trustee structure also mattered. Bushline was not simply a one-person borrower. The trusts had professional trustees, including a lawyer and an accountant. The Supreme Court thought it unlikely that a major five-year pricing commitment would not have been communicated to them and then reflected in the documents they signed.

The Court also looked at what happened after 2008. It considered the absence of any early assertion of a five-year contractual right to be significant. The Court treated the long delay before the claim was clearly pleaded as more than a technical pleading point. It saw that delay as part of the factual picture.

The judgment also shows the importance of putting your case squarely to the other side’s witness. If your claim depends on a specific conversation ending in a specific promise, that proposition usually needs to be put directly in cross-examination. If it is not, the court may treat that omission as damaging.

The practical lesson is about proof and document alignment, not about assuming every finance dispute turns on swaps. By the time this case reached the Supreme Court, the live issue was the alleged five-year margin commitment. That is where the business lesson sits.

If your business is negotiating a loan, do not assume that a verbal assurance about pricing will survive if the signed documents say something different. A lender relationship manager may discuss matching a competitor, holding a margin, or supporting the business over time. But if that commitment matters commercially, it should be written clearly into the final facility documents or another signed document that fits with them.

This is especially important where the finance package has several moving parts. A floating-rate loan, a disclosed margin, a short formal term and a separate swap can create a commercial outcome that feels different from a simple fixed-rate loan. Make sure you know exactly which part of the package is fixed, for how long, and on what conditions.

The case also shows why internal alignment matters. If trustees, directors, guarantors, accountants and lawyers are involved, everyone should understand the same final position before signing. If one person thinks there is a side promise and the documents do not show it, that is a serious risk point.

Use this checklist before signing a major lending package. It is designed to stop a key commercial term from disappearing between the meeting room and the final documents.

The Supreme Court judgment was delivered on 24 July 2020. The Court allowed ANZ’s appeal and restored the High Court decision on the remaining issue before it.

The durable point from the case is evidential. If a pricing or term commitment matters to your business, make sure the signed contract reflects it clearly.