FAI MONEY LIMITED v E E JOHNSTON & ORS [2014] NZHC 193

FAI MONEY LIMITED v E E JOHNSTON & ORS [2014] NZHC 193

The judgments were set aside because sealing occurred without service of the amended statement of claim that introduced necessary particulars to support acceleration and increased claims, rendering the judgments irregular; alternatively, even if not irregular, the second defendants demonstrated a prima facie defence (liability limited to trust assets and contested allegations of dishonesty require full inquiry), so it was appropriate to set aside the judgments and the related bankruptcy notices; costs were reserved.

Citation
[2014] NZHC 193
Parties
Plaintiff: FAI Money Limited; First Defendant: Edward Errol Johnston; Second Defendant: Gavin Crawley; Second Defendant: Richard Anthony Johnston
Court
High Court
Jurisdiction
New Zealand
Judgment Date
18 February 2014
Procedural Posture
Civil — Loan/guarantee Enforcement and Bankruptcy Notices / Application to Set Aside Default Judgments and Related Bankruptcy Notices
Outcome
Judgments against the second defendants set aside; associated bankruptcy notices set aside; costs reserved for determination in the cause.
Legal Topics
Default Judgment, Setting Aside Judgment, Negative Pledge, Trustees' Limited Liability, Allegations of Fraud and Negligence, Service of Amended Pleading, Bankruptcy Notices, Priority of Mortgages
Contract Guarantee Trusts Bankruptcy Civil Procedure Property Law Default Judgment Setting Aside Judgment +6 more

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Parties

FAI Money Limited

Plaintiff

Edward Errol Johnston

First Defendant

Gavin Crawley

Second Defendant

Richard Anthony Johnston

Second Defendant

Procedural Posture

Civil — Loan/guarantee Enforcement and Bankruptcy Notices / Application to Set Aside Default Judgments and Related Bankruptcy Notices

Legal Issues

  1. 1 Whether the default judgment was irregularly obtained by sealing judgment without service of the amended statement of claim
  2. 2 Whether second defendants have a bona fide defence because guarantor liability was limited to trust assets
  3. 3 Whether allegations of dishonesty or negligence by trustees remove the limitation of liability and justify refusal to set aside judgment

Ratio Decidendi

The judgments were set aside because sealing occurred without service of the amended statement of claim that introduced necessary particulars to support acceleration and increased claims, rendering the judgments irregular; alternatively, even if not irregular, the second defendants demonstrated a prima facie defence (liability limited to trust assets and contested allegations of dishonesty require full inquiry), so it was appropriate to set aside the judgments and the related bankruptcy notices; costs were reserved.

Court Disposition

Judgments against the second defendants set aside; associated bankruptcy notices set aside; costs reserved for determination in the cause.

Orders

  • Judgments against Gavin Crawley and Richard Anthony Johnston are set aside
  • Bankruptcy notice dated 14 June 2013 served on Gavin Crawley is set aside