TERRY SCHWASS COMPANY LTD AND JILL SCHWASS COMPANY LTD v DONNA LEE MARSH AND ANDREW TERENCE SCHWASS [2017] NZHC 1382

TERRY SCHWASS COMPANY LTD AND JILL SCHWASS COMPANY LTD v DONNA LEE MARSH AND ANDREW TERENCE SCHWASS [2017] NZHC 1382

The plaintiffs proved on the balance of probabilities that the $910,000 advance was intended as a loan: contemporaneous solicitor correspondence, draft loan and guarantee documents, a registered caveat described as an 'agreement to mortgage', accounting entries recording the advance as a loan, admissions by Andrew and accountant memoranda collectively demonstrate plaintiffs' intention; the oral agreement to mortgage is enforceable by s26 PLA via the doctrine of part performance because the funds were advanced to complete the purchase and acts and documents point to an agreement to mortgage; no signed guarantee was executed so no enforceable guarantee under s27 PLA; no interest is payable...

Citation
[2017] NZHC 1382
Parties
Plaintiff (trustee): Terry Schwass Company Ltd; Plaintiff (trustee): Jill Schwass Company Ltd; First Defendant; Counterclaim Plaintiff: Donna Lee Marsh; First Defendant: Andrew Terence Schwass; Third Parties (solicitors): Hardy-Jones Clark (Michael Hardy-Jones; Christopher Clark; Andrew Finch; Stephanie Ginders)
Court
High Court
Jurisdiction
New Zealand
Judgment Date
22 June 2017
Procedural Posture
Civil Declaratory/proprietary Dispute (loan V Gift) / High Court Hearing and Judgment on Substantive Issues (trial Level, Judgment Delivered)
Outcome
Plaintiffs' claim succeeds in part: $910,000 advance declared a loan; loan enforceable as an agreement to mortgage by part performance; plaintiffs not estopped; no interest payable or enforceable; no enforceable signed guarantee existed.
Legal Topics
Loan Versus Gift, Presumption of Advancement, Part Performance, Estoppel, Mortgage Security, Guarantee Requirements, Interest on Loans
Property Law Trusts Equity Contract Family Law Loan Versus Gift Presumption of Advancement Part Performance +4 more

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Parties

Terry Schwass Company Ltd

Plaintiff (trustee)

Jill Schwass Company Ltd

Plaintiff (trustee)

Donna Lee Marsh

First Defendant; Counterclaim Plaintiff

Andrew Terence Schwass

First Defendant

Hardy-Jones Clark (Michael Hardy-Jones; Christopher Clark; Andrew Finch; Stephanie Ginders)

Third Parties (solicitors)

Procedural Posture

Civil Declaratory/proprietary Dispute (loan V Gift) / High Court Hearing and Judgment on Substantive Issues (trial Level, Judgment Delivered)

Legal Issues

  1. 1 Whether $910,000 advance was a loan or a gift
  2. 2 Whether plaintiffs are estopped from asserting entitlement to repayment
  3. 3 Whether the oral loan agreement is enforceable as a mortgage

Ratio Decidendi

The plaintiffs proved on the balance of probabilities that the $910,000 advance was intended as a loan: contemporaneous solicitor correspondence, draft loan and guarantee documents, a registered caveat described as an 'agreement to mortgage', accounting entries recording the advance as a loan, admissions by Andrew and accountant memoranda collectively demonstrate plaintiffs' intention; the oral agreement to mortgage is enforceable by s26 PLA via the doctrine of part performance because the funds were advanced to complete the purchase and acts and documents point to an agreement to mortgage; no signed guarantee was executed so no enforceable guarantee under s27 PLA; no interest is payable...

Court Disposition

Plaintiffs' claim succeeds in part: $910,000 advance declared a loan; loan enforceable as an agreement to mortgage by part performance; plaintiffs not estopped; no interest payable or enforceable; no enforceable signed guarantee existed.

Orders

  • Declared: $910000 advance from the Schwass Family Trusts to Andrew Terence Schwass and Donna Lee Marsh was a loan, not a gift
  • Declared: the oral agreement to mortgage evidenced in contemporaneous correspondence of 31 March 2010 is enforceable by virtue of s26 Property Law Act 2007 and the doctrine of part performance