PORTERFIELD V CASH STOP FINANCE LIMITED HC CHCH CIV-2006-409-001816

PORTERFIELD V CASH STOP FINANCE LIMITED HC CHCH CIV-2006-409-001816 18 December 2006IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY CIV-2006-409-001816BETWEEN NORMAN LESLIE PORTERFIELD Plaintiff AND CASH STOP FINANCE LIMITED Defendant Hearing: 12 December 2006 Appearances: P James & C M Gray for Plaintiff R D McGuire for Defendant Judgment: 18 December 2006JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN[1] Mr Porterfield has applied for an order for liquidation of Cash Stop Finance Limited (CSFL). On 16 June 2006 he served a statutory demand requiring repayment of $254,722.69 to recover loans made. At about the same time he issued proceedings against Darryn Hunt and Barry Hunt to recover those same sums upon a summary judgment application. In respect of that claim I entered judgment against Darryn Hunt on 14 September 2006. [2] Meanwhile, on 10 August 2006 Mr Porterfield applied for liquidation of CSFL. [3] The issue is whether CSFL is also liable for the debt on which I have already given judgment against Darryn Hunt. If I should have any serious doubt about that conclusion I should decline the application for CSFL's liquidation and require the parties to pursue their dispute by ordinary process.Background[4] I need not provide this in detail as it is mostly covered by my judgment dated 14 September 2006. But, in brief: a) Mr Porterfield made advances totalling $254,722.69 for various purposes to Mr Darryn Hunt, who used it in his loan business operated under the name of Cash Stop Finance. b) The monies were not repaid when due, but in correspondence between solicitors an agreement was reached concerning repayment and the provision of security. c) The funds were not repaid and an issue arose about the enforceability of the agreement reached. d) I decided there was an arguable case that Barry Hunt was not liable for Mr Porterfield's debt. However, I considered an agreement had been reached whereby Darryn Hunt would repay the debt. The repayment arrangement included the incorporation of Cash Stop Finance's business as a limited liability in order to pay the debt and to provide security as support for repayment. e) I granted judgment in the sum of $220,000 only, because I considered the balance claimed may not by that date be due. [5] In my judgment upon the summary judgment application I held:In my view an agreement was reached by which, a company, Cash Stop Finance Limited would be incorporated to assume the responsibilities for repayment of Mr Porterfield's advances totalling $220,000. Further, it was agreed Darryn Hunt would complete a personal guarantee to ensure repayment [para 44][6] And further:Cash Stop Finance Limited was incorporated to assume responsibility for the loan. Darryn Hunt refused to provide a guarantee, but by then his obligationhad been cast. his execution of a guarantee document became but a formality. [para 45][7] The liquidation application has been opposed because it allegedly represents duplication of the claim against Darryn and his brother, Barry. Mr McGuire submits that Mr Porterfield made the election regarding who was responsible when he sued and succeeded against Darryn Hunt. Also, the arrangement by which CSFL was to provide security was never documented, in that the security documents were never completed by or on behalf of Mr Porterfield. [8] An answer to those submissions is provided in the brief excerpts from my prior judgment which I have detailed herein. It was agreed CSFL would assume responsibility for the debt and that Darryn Hunt guarantee his company's obligation. I have found him liable under his guarantee even although he later sought to resile from it. Likewise, and although the security arrangements were not put in place, I consider it does not absolve CSFL from its obligation to pay. [9] The clear evidence is that by agreement between all parties the loans made by Mr Porterfield were, for good consideration, assumed by CSFL upon that company being incorporated, and guaranteed by Darryn Hunt. Correspondence between the solicitors confirmed that arrangement. It continues to exist notwithstanding there is no enforceable security against CSFL's assets.Judgment[10] CSFL has no arguable defence to the application for liquidation. Although I am able forthwith to make an order for liquidation, it is appropriate to allow a further short period of time to enable payment of the debt due. Mr Porterfield has claimed against Darryn Hunt and the company, probably in the view that one or other was liable for it. I suspect Mr Porterfield would achieve greater benefit from an early repayment rather than having to endure the usual delays of execution process. That said, he now has two strings to his bow. Mr Hunt and/or his company are both at risk.[11] I am adjourning the liquidation application until 10 a.m. on 29 January 2007. [12] Mr Porterfield is entitled to costs upon this application on a category 2B basis.