HANOVER FINANCE LIMITED (PREVIOUSLY KNOWN AS ELDERS FINANCE LIMITED) V A M KRUKZIENER HC AK CIV2006-404-1667

HANOVER FINANCE LIMITED (PREVIOUSLY KNOWN AS ELDERS FINANCE LIMITED) V A M KRUKZIENER HC AK CIV2006-404-1667 5 April 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV2006-404-1667BETWEEN HANOVER FINANCE LIMITED (PREVIOUSLY KNOWN AS ELDERS FINANCE LIMITED) Plaintiff AND A M KRUKZIENER Defendant Hearing: 24 November 2006 Appearances: C R Carruthers QC and L O'Gorman for Plaintiff J R Billington QC for Defendant Judgment: 5 April 2007 at 4.30 pmRESERVED JUDGMENT OF ASSOCIATE JUDGE SARGISSONSolicitors: Buddle Findlay, PO Box 305, Wellington Izard Weston, PO Box 5348, Wellington[1] This is an application by the plaintiff, Hanover Finance Limited, for summary judgment. In its statement of claim Hanover seeks judgment in the sum of $5,256,167.41 with default interest from 27 March 2006 and costs. At the hearing counsel for Hanover advised that the sum sought is reduced by $1,096,780.80 received as proceeds from a mortgagee sale. [2] The application is opposed. The defendant, Mr Krukziener, advances seven defences.Background[3] Hanover is a finance company. On 22 November 2002 it made a loan to Andrew Krukziener (No. 1) Limited and Andrew Krukziener (No. 2) Limited. The loan consolidated various earlier advances. Mr Krukziener was guarantor of the loan and he executed a deed of guarantee and indemnity on 22 November 2002 by which he guaranteed the payment and due performance of all "guaranteed indebtedness". Guaranteed indebtedness is defined in the guarantee to mean all indebtedness of the two debtor companies to Hanover. [4] On 20 December 2002, a company called Structured Finance (NZ) Limited made a loan to the two debtor companies. Mr Krukziener was guarantor of this loan also and he executed a deed of guarantee and indemnity dated 20 December 2002 in favour of Structured Finance by which he guaranteed the payment and due performance of all "guaranteed indebtedness". Guaranteed indebtedness was defined in the guarantee as all indebtedness of the two debtor companies to Structured Finance. Structured Finance's interest in the loan and the guarantee was assigned to Hanover on 22 December 2005. [5] The Hanover loan was secured by mortgage No. C842380.10 dated 13 April 1995 granted over the fee simple of Unit B, 17 Albert Street Auckland City. The Structured Finance loan was secured by mortgage No. M5448940.1 dated 20 December 2002 also granted over the fee simple of Unit B, 17 Albert Street Auckland City.Defaults[6] As at 21 December 2005, the debtor companies were in default of: a) The Hanover loan agreement. b) The mortgage to Hanover. c) The Structured Finance loan agreement. d) The mortgage to Structured Finance. [7] The defaults arose out of the failure of the debtor companies to pay: a) Auckland City Council rates of $21,090.03 outstanding on the mortgaged property at Albert Street. b) Penalties of $182.91 on Auckland Regional Council rates owing on the property. c) The principal sum, fees and interest totalling $109,742.11 due under the Structured Finance loan agreement. The original date for repayment in full was 18 December 2003 but under approved extensions, the date had been extended to 18 November 2004.Notices of default and acceleration[8] On 23 December 2005, Hanover served each of the debtor companies with notices under s 92 Property Law Act 1952 giving notice of the defaults. [9] On 11 January 2006 Hanover gave notice of the defaults to Mr Krukziener, as guarantor, by serving two s 92 notices on him. [10] The two debtor companies and Mr Krukziener did not comply with their notices which required them to remedy the defaults by 3 February 2006. The failureto remedy the defaults resulted in an acceleration of the amounts outstanding under both loans. [11] By letter dated 17 March 2006, Hanover made further demand on Mr Krukziener for the total sums then owing and due, being: a) $5,116,616.56 in respect of the Hanover loan (including accrued interest, with the default rate of 18% interest applying from 22 December 2005); and b) $114,016.15 in respect of the Structured Finance loan (including accrued interest, with the default rate of 16.5% interest applying from 22 December 2005).Commencement of proceeding[12] Hanover's further demand was not met and on 27 March 2006 Hanover commenced this proceeding against Mr Krukziener together with its application for summary judgment to enforce the guarantees. It contends that he has no defence to the claim and has filed affidavit evidence to verify the various allegations in its statement of claim. As at 27 March 2006 (when the statement of claim was filed), the indebtedness under the Hanover loan was $5,141,639.41 and the indebtedness under the Structured Finance loan was $114,528.00.Recovery under securities[13] During June 2006, Hanover exercised its power of sale as mortgagee over the Albert St property and received $1,096,780.80. Shortly before the hearing part of that sum was applied to the outstanding debt under the Structured Finance loan. At the hearing, counsel for Hanover acknowledged there is now no outstanding debt in respect of that loan.Joint venture agreement[14] On 22 November 2002, the day the Hanover loan agreement was signed, five parties entered a project management/joint venture agreement (JVA). They were: Wolfe Developments Ltd (as trustee of the Wolfe Development Trust), Mr Krukziener as Wolfe's guarantor, Axis Wolfe Developments Ltd, Axis Property Group Holdings Ltd and Hanover Group Holdings Ltd. The parties' intention was to develop a residential apartment tower building to be known as The Wolfe at 13 and 15 Albert St, Auckland City. Wolfe was to manage the development and Axis Wolfe was to source the funding. [15] It is common ground that The Wolfe was expected to produce a sufficient profit to enable the two debtor companies to repay the Hanover Loan. Consistent with that purpose, the special terms of the Hanover loan agreement provided for repayment of the Hanover loan six months after the completion of The Wolfe development or earlier termination of the JVA. [16] The Wolfe development never went ahead. Mr Krukziener maintains that Axis Wolfe failed in its obligations to source appropriate funding and he refers to the JVA and its failure or inability to proceed with the Wolfe development in several of the defences he relies on.Documents in opposition/further evidence[17] Mr Krukzeiner filed a notice of opposition and has filed affidavit evidence in which he takes issue with Hanover's claim. [18] Each side has filed further evidence in reply and/or rebuttal.Issue[19] Hanover has called sufficient evidence for the purpose of formal proof and the real issue I need to consider is whether Mr Krukziener has raised an arguabledefence or defences. If he has, then it is common ground that summary judgment would not be appropriate and that Hanover's claim should to go trial.Legal Principles[20] In seeking summary judgment, the onus is on the plaintiff to show on the balance of probabilities that the defendant has no arguable defence to the plaintiff's claim. The concept of no defence is described as "the absence of any real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1, 3. [21] If the plaintiff adduces sufficient evidence to prove its claim, and there is no possible defence apparent in the plaintiff's pleadings or evidence, summary judgment will be entered unless the defendant raises a possible defence. Once the defendant has provided an evidential foundation for the defence, the onus is on the plaintiff to show that the defence is not genuinely arguable. [22] Put another way, if the plaintiff adduces sufficient evidence to prove its claim, there is an evidential onus on the defendant to provide a foundation for any defences that are raised. To defeat a plaintiff's application for summary judgment, the defendant must provide sufficient particulars to show that there is an issue worthy of trial: Pemberton v Chappell at 3. [23] If no credible evidential foundation is provided by the defendant, then the plaintiff's verification ought to be accepted unless it is patently wrong: Australian Guarantee Corporation (NZ) Ltd v McBeth [1992] 3 NZLR 54, 59. [24] Simple assertions by a defendant in an affidavit in opposition are insufficient to raise an arguable defence, particularly where those assertions are inconsistent with proved documents and lack credibility: Bishopdale Developments Ltd v Lincoln Turner (NZ) Ltd (1990) 4 PRNZ 584. [25] In Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA), 85-86, Cooke P summarised the situation by stating that: the need for judicial caution has to be balanced, when considering a summary judgment application, with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. In the end it can only be a matter of judgment on the particular facts.[26] In the words of Lord Diplock in Eng Mee Yong v Letchumanan [1980] AC 331 at 341 E, the Judge is not bound:to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.[27] A defendant must provide a credible evidential foundation to support its claim that a set off is available: Kitchener Construction Limited v McConnell Dowell Constructors Limited, (HC, Auckland M1601/IM01, 25 February 2002, Harrison J). [28] Where an amount is indisputably due and owing, but there is a dispute in relation to the balance of the claim, the Court has a discretion to give summary judgment for part of the claim: Australian Guarantee Corporation (NZ) Limited v McBeth at 59 and 61. [29] It is also worth mentioning the Privy Council's recent decision in Jones v Attorney General [2004] 1 NZLR 433 approving a passage from Westpac Banking Corporation v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA) wherein Elias CJ said:[62] An application for summary judgment will be inappropriate where there are disputed issues of material fact or where material facts need to be ascertained by the Court and cannot confidently be concluded by the affidavit. It may also be inappropriate where the ultimate determination depends on a judgment only able to be properly arrived at after a full hearing of the evidence. Summary judgment is suitable for cases where abbreviated proceedings and affidavit evidence will sufficiently expose the facts and legal issues ... [63] Except in clear cases, such as a claim upon a simple debt where it is reasonable to expect proof to be immediately available, it will not be appropriate to decide by summary judgment procedure the sufficiency of the proof of the plaintiff's claim. Grounds of Opposition[30] Mr Krukziener does not deny the background facts, but he contends that summary judgment should not be entered because he has a number of arguable defences. [31] At the hearing, Mr Billington QC indicated that Mr Krukziener relies on seven defences. Not all appear in or are obvious from the documents filed in opposition. The first three are inter-linked, and allege that Mr Krukziener has claims under the JVA. They also depend on the assertion that Hanover was a party to the JVA or may be equated with Hanover Group Holdings Limited under the JVA. [32] The defences can be summarised as follows: a) Hanover is indebted to Mr Krukziener under the JVA in a sum to be set off against the Hanover mortgage. b) Hanover is in breach of its obligation under the JVA to be performed by Axis Wolfe, to procure senior debt funding for the purchase of 13 and 15 Albert St. The failure by Axis Wolfe to perform gives Mr Krukziener the right to claim damages which may be set off against any liability he has in respect of the Hanover loan agreement. c) Hanover is a party to the JVA and has failed to act "in good faith" under clauses 3.2 and 6.3, and pursuant to general obligations imposed by the law of partnership. The failure by Hanover gives Mr Krukziener a further right of set-off. d) Hanover has failed to prove compliance with the legal obligations of a mortgagee making demand of a mortgagor and guarantor for payment of sums due under mortgages.e) Hanover failed to apply the proceeds of sale received on the mortgagee sale as required by the Land Transfer Act 1952 and obligations contained in the security documents. f) The Structured Finance mortgage has/or should have been repaid. g) Hanover is estopped from demanding payment under the Hanover loan agreement.First and second defences: set off[33] In the first defence, Mr Krukziener's claim that Hanover is indebted to him under the JVA in a sum to be set off against the Hanover mortgage, is based on clause 5.6 of the JVA. [34] The clause allows Wolfe Developments to set off a development fee, when the fee is due, against the Hanover loan for the benefit of the two debtor companies, and it contains an acknowledgement to that effect by Hanover Group Holdings on behalf of Hanover. The development fee equals 70% of the net profit of the Wolfe development. Under clause 25 of the JVA, the parties acknowledge that for the purpose of the Contracts Privity Act 1982, the covenants in clause 5.6 are given for the benefit of the two debtor companies who may enforce the covenants notwithstanding that they are not parties to the JVA. [35] Even if clauses 5.6 and 25 mean that Hanover and Hanover Group Holdings may be treated as one and the same for the purpose of setting off the development fee against the Hanover loan, the evidence for Mr Krukziener provides no basis for the contention that the development fee has become due and payable under the JVA. Rather, the evidence given on Mr Krukziener's behalf is to the effect that the development fee did not become due because Axis Wolfe allegedly breached its obligations to provide the necessary funding for the Wolfe development. The profit from the development was intended to produce the development fee, but because the development did not go ahead, there was no profit. Significantly clauses 5.6 and 25do not provide for the non-parties to excuse rights to sue for Axis Wolfe's failure to provide the necessary funding. [36] Further, even assuming the development fee did become due, Mr Krukziener is a different party in law to Wolfe Developments and the debtor companies, and no authority was advanced to support the contention that he has a contractual right to enforce the development fee arising out of the JVA. There is no case for lifting the corporate veil and treating Mr Krukziener as one and the same as Wolfe Developments or the debtor companies. [37] The first defence must therefore fail. [38] In the second defence, Mr Krukziener's contention is that Hanover's alleged breach of its JVA obligation to procure senior debt funding, and the alleged resulting set off, is sufficiently interdependent with the guarantees because the JVA was the rationale for the loans and the guarantees. Mr Krukziener relies on the decision of the Court of Appeal in Hamilton Ice Arena Ltd v Perry Developments Ltd [2002] 1 NZLR 309. [39] Save in cases of recognised exceptions, for there to be set off the claims must exist between the same parties and in the same right: Hamilton Ice Arena Ltd v Perry Developments Ltd, 312. The exceptions, none of which apply here, are set out in detail in Set Off and Counterclaim 42 Halsbury's Laws of England (4 th ed Reissue 1999) at para 447ff. (In Hamilton Ice Arena the appellant owed money to the respondent for rent, whereas the respondent owed money for wages not to the appellant company but to the brothers who were its shareholders. There was no identity of parties in those circumstances. The Court of Appeal noted that there could be no question of lifting or piercing the corporate veil). [40] Here there is not identity of parties. If there is an arguable claim under the JVA against Hanover Group Holdings, it is Wolfe Development's claim against Hanover Group Holdings, not Hanover. Hanover was clearly not a party to the JVA and no recognised exception was advanced for treating it as such. Mr Krukziener asserts that Hanover is a wholly owned subsidiary of Hanover Group Holdingswhich was a party to the JVA. However, even assuming Mr Krukziener's limited evidence is sufficient to support this factual proposition, no authority was advanced to support his further proposition that Hanover's status justifies its being equated with Hanover Group Holdings under the JVA for the purpose of a claim for damages. The separate legal personality of companies is a fundamental part of commercial law in New Zealand and Courts will not lightly lift the corporate veil. Without identity of parties, interdependence of claims does not arise for consideration. [41] Mr Krukziener faces further difficulties which are equally fatal to the claim to set off raised in this defence. Mr Krukziener relies on Axis Wolfe's failure to procure senior debt funding, claiming set off of losses thus incurred by the debtor companies, yet he provides no authority for equating Axis Wolfe with Hanover Group Holdings. I accept the submission made by counsel for Hanover that Hanover cannot be in breach of an obligation which was to be performed by Axis Wolfe under a contract to which Hanover is not a party. Mr Krukziener provides no answer to this submission. [42] The reality is that Hanover is not Hanover Group Holdings and Hanover Group Holdings is not Axis Wolfe. They are different legal entities. Further, the transaction to which Hanover is a party is a separate transaction to the JVA which Hanover Group Holdings and Axis Wolfe are parties to. Although each transaction refers to the other, the transactions have been structured to maintain separation between the parties and between the two transactions. The overlap has been carefully limited to the rights and obligations dealt with in clauses 5.6 and 25 of the JVA. Both transactions have been undertaken with legal advice, and the separation can only be treated as deliberate. [43] For the above reasons, It is not possible to discern an arguable basis for the second defence so this defence also fails.Third defence: lack of good faith[44] Mr Krukziener submits that Hanover, as a party to the JVA, has failed to act in good faith. [45] As set out above, Mr Krukziener has not demonstrated a basis for the contention that Hanover was a party to or liable under the JVA. I therefore accept Hanover's submission that it was not required by the JVA to act in good faith. No arguable defence based on good faith has been raised.Fourth defence: s 92 notices[46] At the hearing Mr Billington raised as a new defence that Hanover has failed to prove compliance with the obligations of a mortgagee exercising a power of sale to serve proper notices under s 92 of the Property Law Act 1952 when it commenced the mortgage sale process in respect of the Unit B, 17 Albert Street. [47] The defence was not based on any of the grounds in Mr Krukziener's notice of opposition. [48] Mr Billington submitted that the failure arises because the statement of claim pleads demands under s 92 the Act based on defaults under the Hanover and Structured Finance mortgages arising out of unpaid rates and unpaid principal due under the Structured Finance mortgage, but: a) As Hanover did not produce the s 92 notices in its affidavit evidence, it gave no satisfactory explanation for why it alleges these defaults. b) The default as to rates is in conflict with defaults described in the transfer instrument that gave effect to the mortgagee sale. [49] In this last respect Mr Billington argued that the conflict impugns the validity of s 92 notices and casts doubt on the defaults in the notices. The transfer he relied on is exhibited to an affidavit filed by Mr Krukziener the day before the hearing.The affidavit was filed well outside the timeframes set in the Court's timetable directions. [50] I allowed Hanover to file an affidavit from a Mr Humphrey in response to the late allegations. Mr Humphrey, a solicitor at Buddle Findlay, exhibited to his affidavit copies of the s 92 notices and an affidavit as to service of the notices sworn by a process server named Mr King. [51] Mr Billington raised a further point, arising out of Mr King's affidavit, challenging the validity of service on the debtor companies of the s 92 notices. [52] It would have been preferable if Hanover had produced the s 92 notices from the outset. However, Hanover clearly pleaded in its statement of claim that it served s 92 notices on the debtor companies on 23 December 2005 and a further s 92 notice on Mr Krukziener as guarantor on 11 January 2006. The pleading is verified by a Mr Bryan, the General Manager of Hanover, who deposes that he has personal knowledge of the matters to which the proceeding relates. The verified pleading also provides particulars of the defaults relied on in the notices. They are the same defaults as those referred to at [7] of this judgment. [53] There is nothing that amounts to a credible evidential foundation in the evidence filed on behalf of Mr Krukziener that challenges Hanover's verification of its pleading as to the defaults described in them. [54] The net result is that Hanover's verification of the particulars of the defaults relied on in the s 92 notices stands: Australian Guarantee Corporation. The failure to produce the notices is not a reason to doubt the defaults. [55] Significantly, there is no evidential challenge to Hanover's verified claim that the defaults remained unremedied prior to the mortgagee sale, and late production of the notices, although not strictly necessary, has simply confirmed the particulars of the defaults earlier verified in Mr Bryan's affidavit. [56] As to the conflict between the s 92 notices and the transfer instrument, I reject the submission that the conflict impugns the validity of the s 92 notices. Thesole basis for the challenge is the disparity between the defaults set out in the two documents. However the mere fact that the transfer refers to defaults that are different from those in the s 92 notices does not impugn the validity of the s 92 notices. Further, nothing turns on the fact that the transfer itself does not refer to the defaults in the s 92 notices. [57] The s 92 notices list the same defaults as the letters of demand dated 17 March 2006 – the principal sum, fees and interest under the Structured Finance loan, Auckland City Council rates, and Auckland Regional Council rates – as set out at [7] of this judgment and at paragraph 14 of the statement of claim. The recital in the transfer instrument, however, specifies the defaults as a failure to pay the outstanding balance of a current account and twelve outstanding term loan instalments. [58] In this last respect, counsel for Hanover readily accepted that the transfer does not refer to the defaults that are described in the notices, but he pointed out that there is no need for a transfer instrument to contain a recital detailing the default. He relied on ss 90 and 237 Land Transfer Act 1952. Section 90(2) provides:[[90 Transfers and creation of easements, etc, by registered proprietor (2) A transfer instrument must include the following information: (a) the estate or interest to be transferred[, created, or surrendered] , which must include a reference to the register in the prescribed manner; and (b) the person who is to take the interest. [59] Section 237 provides:[237 When paper instrument is in acceptable form(1) A paper instrument is in an acceptable form if— (a) it contains the information required by this Act; and (b) it meets the requirements for the physical properties of paper instruments that are prescribed by regulations made under this Act. (2) A paper instrument must be regarded as containing the information required by this Act if—(a) either— (i) it is in a form prescribed by regulations made under this Act; or (ii) it is in a form specified by the Registrar prior to its lodgement; and (b) it is properly completed. (3) However, a paper instrument must be regarded as being in an acceptable form if it does not comply with subsections (1) and (2), but the non-compliance relates to a minor matter that, in the opinion of the Registrar, will not affect the operation or effect of the instrument once it is registered.][60] The transfer instrument complies with the requirements of these sections. [61] The result is that I am persuaded that the transfer does not point to defects in the s 92 notices. It is immaterial that the defaults set out in the notices do not correspond to the defaults specified in the transfer. The recital in the transfer instrument may be somewhat inaccurate or perhaps merely obscurely expressed, but these factors do not operate to retrospectively invalidate the s 92 notices. [62] Coming to the submission as to service, Mr King deposed that he served the s 92 notices personally on the debtor companies by delivering them personally at Level 9, Union House, 132-138 Quay St, Auckland. Mr Billington submitted in that last respect, that as the mortgages provided a different address for service, service of the notices was invalid. [63] Counsel for Hanover sought leave to file an affidavit to produce company searches to demonstrate that the Quay Street address was, at the time of service, the registered office and registered address for service for the two debtor companies, and to advance the submission that such service complies with the requirements of s 152 (6A) Property Law Act 1952 and s 388 of the Companies Act 1993, and overrides any provision in the mortgage as to service. [64] Section 152(6A) PLA makes clear that it overrides any provision in a mortgage as to service. I am satisfied that, when read together with s 388 of the Companies Act 1993, s 152(6A) PLA is satisfied by personal service on the mortgagors' registered office.[65] However I do not find it necessary to deal with Hanover's application to file an affidavit to prove the registered office. Service on the debtor companies was pleaded and Mr Bryan verified the pleading. The verified pleading as to service was not challenged and Mr King's affidavit does not cast doubt on it. The verified pleading stands. [66] In addition, I do not think the interests of justice would be served by allowing a challenge to the validity of service to be raised at the close of the hearing, when there had not been the slightest indication before then of any prejudice to the debtor companies in connection with service or Hanover's verification as to service. [67] If there were real merit in the contention that the debtor companies were not validly served, then the contention should have been raised in the grounds of opposition and some credible evidential basis should have been provided for it. [68] Nor is there anything in the relevant provisions as to service contained in the mortgages that actually indicates that service at the Quay Street address was not valid service. Clause 13 of the Hanover mortgage provides that the requirement of service is satisfied by personal service, service on the land, or service by registered post on the mortgagor's last known place of residence or business. Clause 9 of the Structure Finance mortgage provides that a company is served by service on its registered office or last known place of business and that actual receipt is sufficient service. [69] For the above reasons, I do not accept that Hanover has not explained why it alleges particular defaults under the Property Law Act, or that the transfer instrument impugns the Property Law Act notices, or that service of the notices was invalid. Mr Krukziener has not established an arguable defence in relation to the s 92 notices.Fifth and sixth defences: application of proceeds of sale[70] Both parties agree that Hanover has now repaid the Structured Finance loan with the proceeds of the mortgagee sale of 17 Albert Street. No further issue arises in respect of these grounds of opposition.[71] The remaining significance of the default under the Structured Finance loan agreement is that it triggered the acceleration provisions in that agreement and in the Hanover loan agreement.Seventh defence: Promissory estoppel[72] This ground is based on the contention that Hanover is estopped from demanding payment of the Hanover loan because the CEO of Hanover, Mr Finnigan, promised Mr Krukziener that the Hanover loan would not go into default until six months after completion of The Wolfe development or termination of the JVA and the JVA was still in existence in December 2005 when the demand for repayment of the Hanover loan was made under the Property Law Act notices. [73] The submission is that the promise gives rise to the doctrine of promissory estoppel with the result that Hanover was not entitled to rely on the standard default provisions in clause 9 in the Hanover loan agreement to accelerate demand for repayment when the debtor companies defaulted or to commence proceedings against Mr Krukziener based on the default. [74] At the hearing Mr Billington advised that the evidence Mr Krukziener relies on in support of the alleged promise is a statement in the affidavit of Mr Finnigan filed in support of Mr Krukziener's opposition to summary judgment. [75] Mr Finnigan was the CEO of Hanover at the time the Hanover loan agreement was signed. The relevant statement in his affidavit reads:I negotiated the commercial terms of the joint venture and the loan agreement with Andrew Krukziener ... In those negotiations I agreed that the documentation would reflect our agreement that the loan could not go into default until six months after the completion of the Wolfe Development or termination of the joint venture agreement as a result of any payment obligations or defaults by the borrowers. I note from reading the documentation now that this is not the case.[76] Mr Krukziener gives his description of the alleged promise in his affidavit evidence, and says it amounted to a fundamental term of the loan and joint ventureagreements without which he would not have entered into them. The relevant statement reads:... I would not have entered into the joint venture agreement or the second loan agreement without ... confirmation that the loan would not be due and there would not be able to be defaults possible in the facility until six months after completion of the joint venture. By seeking to accelerate the time for payment of the loan amount, Hanover is breaching this fundamental term of the loan and joint venture agreement.[77] In order to establish an arguable defence based on promissory estoppel Mr Krukziener must provide a credible evidential foundation for saying the essential elements of the doctrine are met. The doctrine of promissory estoppel requires: a) A clear, unambiguous representation or promise by one party to the other. b) Reliance on the promise by the promisee to such an extent that it would be inequitable or unconscionable not to hold the promisor to the promise. c) That the promisee has kept his word under the arrangement. (See Burrows, Finn and Todd Law of Contract in New Zealand, (3 rd ed, 2007) at 4.7.4) [78] I do not accept that Mr Krukziener has raised a credible evidential foundation for a defence based on the doctrine of promissory estoppel. [79] My reasons follow. [80] First, Mr Finnigan's statement does not disclose a clear, unambiguous representation or promise. The statement describes a representation by Mr Finnigan in the course of his negotiating the "commercial" terms for inclusion in the written agreement. The representation dealt, in broad terms, with what the documented terms of the Hanover loan agreement would reflect on the matter of default.[81] The representation did not extend to the precise wording of the default terms or with how Mr Finnigan proposed that the loan agreement would document the somewhat vague promise that until the occurrence of a particular event "the loan could not go into default ... as a result of any payment obligations or defaults by the borrowers". Further negotiation was plainly required to arrive at clear unambiguous terms for inclusion in the written contract to specify clearly what the promise actually meant and how it was to work. Mr Finnigan does not suggest otherwise. [82] Secondly, there is no reason on the evidence to conclude that Mr Krukziener relied on the representation in the way he claims or that the final written agreement did not reflect the final position of the parties. The final agreement allowed for repayment of all of the principal and deferred interest at the conclusion of The Wolfe development or the earlier termination of the JVA. To that extent, the written agreement is consistent with Mr Finnigan's representation, but it retains standard terms providing for acceleration in the case of various incidents of default such as failure to pay insurance and rates on the mortgaged property at Albert Street. If, as Mr Krukziener contends, he viewed the representation as a fundamental term of the loan and joint venture agreements, he provides no plausible explanation for signing a loan agreement containing written terms that do not reflect accurately the terms of the representation. [83] It is equally implausible that Mr Krukziener's solicitors at Chapman Tripp would not have raised objection to the retention of the standard default provisions before attending on his execution of the agreement. Yet there is no suggestion that the solicitors or Mr Krukzeiner disputed the standard default provisions or raised objection to them. Significantly, the agreement also states at clause 22 that it is an entire agreement and at clause 22.2 that it is paramount and will prevail over any offer or prior agreement. There is no suggestion in the evidence that objection was taken by Mr Krukziener or his solicitors to these terms either. [84] There is however evidence from Ms Dwyer, Hanover's legal counsel, that she drew the attention of Mr Krukziener's solicitors to the standard default and acceleration provisions shortly before the agreement was signed. In her e-mail sent late in the afternoon of 21 November to Chapman Tripp and copied to MrKrukziener and to Mr Finnigan, Ms Dwyer dealt specifically with the provisions as to default interest and noted that in all other respects normal enforcement provisions would apply. She noted that the loan would not be on demand but that Hanover would retain the right to accelerate the loan and to demand payment in full upon a default event. Had there been reservations that Mr Finnigan had not delivered on his promise then it is inconceivable that Chapman Tripp would not have objected and asked for the documentation to be amended before Mr Krukziener signed it. Had there been a mistake as to the contents of the documentation, then one would have expected Mr Krukziener to raise a defence based on rectification. [85] There is, in the circumstances, no reason to suppose that there was an outstanding and operative promise which Mr Krukzeiner relied on at the time the contractual documents were signed which the parties failed to indicate in the documentation. [86] Given my findings on the first two essential elements of the doctrine of promissory estoppel, it is not necessary for me to deal with the issue of detriment or unconscionability. However if I am wrong I respect of the first two elements, I am satisfied that there is no credible evidence that Mr Krukziener suffered any detriment as a result of Mr Finnigan's representation. It is helpful in this regard to set out Mr Finnigan's explanation of the context in which the JVA and the Hanover loan agreement were entered into. He explained that Hanover considered entering into the JVA as a means of securing repayment of an unsecured position it was carrying in its books and thereby avoiding the need to reclassify the loan as impaired or to suspend interest in the accounts. He said: It was our anticipation that the joint venture agreement would make sufficient monies to repay the loan in full. [87] There is no dispute that the two debtor companies welcomed the JVA as a means of enabling them to repay the Hanover loan. Under the JVA, Wolfe Developments was to procure the application of its development fee to reduce or repay in full the Hanover loan. In these circumstances, the Hanover loan and the JVA were a benefit to Mr Krukziener's companies and to Mr Krukziener himself.They were a means by which the companies could repay the Hanover loan and by which Mr Krukziener could avoid liability under the Hanover guarantee.Conclusion[88] For the above reasons I am persuaded that the defendant Mr Krukziener, has no arguable defence to the plaintiff's claim for summary judgment.Result[89] I order by way of summary judgment in favour of the plaintiff as follows: a) Judgment in the sum of $4,159.386.61. b) Interest under the Hanover loan agreement from 27 March 2006 to the date of judgment. c) Costs under the Hanover loan agreement. [90] In case there is dispute about the amounts payable under [87] (b) and (c), leave is reserved to file and serve memoranda by 24 April 2007. Such leave is also reserved in the event that there are outstanding interest payments or costs on the Structured Finance loan. Dated at Auckland on ______________________ at ____________ am/pm. ________________________________ Associate Judge Sargisson