WAIMAURI LIMITED v GORDON [2021] NZHC 2965

WAIMAURI LIMITED v GORDON [2021] NZHC 2965 [3 November 2021]IN THE HIGH COURT OF NEW ZEALANDNELSON REGISTRYI TE KŌTI MATUA O AOTEAROAWHAKATŪ ROHECIV-2021-442-007[2021] NZHC 2965BETWEEN WAIMAURI LIMITEDPlaintiffAND SUSAN GORDON as administrator of theestate of Colin Norman GordonDefendantHearing: 6 October 2021Appearances: M Lenihan for PlaintiffJ Ironside and G Engelbrecht for DefendantJudgment: 3 November 2021JUDGMENT OF ASSOCIATE JUDGE JOHNSTONIntroduction[1] At the centre of this dispute is a 1949 Aston Martin DB1. To anyone whoknows anything about motor cars, that in itself is enough to pique interest. It is anextremely rare and very valuable vehicle. Only 15 were ever made.[2] The plaintiff, Waimauri Ltd, sues the defendant, Mrs Susan Gordon in hercapacity as the administrator of the estate of her late husband, Mr Colin Gordon,pursuant to a term loan agreement that involved Waimauri as lender and aMr Dale Conlon and Mr Gordon as borrowers. The agreement was executed as longago as 9 February 2009. Waimauri contends that the borrowers have been in defaultsince 9 May 2009 when the principal and interest (in the agreement designated"premium") was payable. The original principal amount of the loan was $70,000.With the premium, and interest from 9 May 2009 at contractual rates, the amountsought is now close to $600,000.[3] Waimauri has applied for summary judgment. In my judgment, its applicationcannot succeed. The balance of this judgment is directed at explaining why.Summary judgment applications[4] Summary judgment is provided for in pt 12 of the High Court Rules 2016.Rule 12.2(1) concerns applications by plaintiffs. It provides:(1) The court may give judgment against a defendant if the plaintiffsatisfies the court that the defendant has no defence to a cause ofaction in the statement of claim or to a particular part of any suchcause of action.[5] The leading case is Kruikziener v Hanover Finance where the Court of Appealsaid:1The principles are well settled. The question on a summary judgmentapplication is whether the defendant has no defence to the claim; that is, thatthere is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1at 3 (CA). The Court must be left without any real doubt or uncertainty. Theonus is on the plaintiff, but where its evidence is sufficient to show there is nodefence, the defendant will have to respond if the application is to be defeated:MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normallyresolve material conflicts of evidence or assess the credibility of deponents.But it need not accept uncritically evidence that is inherently lacking incredibility, as for example where the evidence is not consistent withundisputed contemporary documents or other statements by the samedeponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980]AC 331 at 341 (PC). In the end the Court's assessment of the evidence is amatter of judgment. The Court may take a robust and realistic approach wherethe facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).Under r 141A the defendant need not file a statement of defence. The onusremains on the plaintiff, and summary judgment will be denied if on thehearing of the application it appears that there is an issue worthy of trial.[6] In the end, then, the plaintiff applicant must be able to satisfy the Court so thatit is left with no real doubt or uncertainty that the defendant respondent has no arguabledefence.1 Kruikziener v Hanover Finance [2008] NZCA 187 at [26]–[27]The factual background[7] The description of the factual background that follows is based for the mostpart on the affidavit evidence offered in support of Waimauri's application.[8] The Aston was acquired in 1991 for £100,000. A considerable proportion ofthe affidavit evidence offered in support of and in opposition to Waimauri's applicationwas directed at the question of whether it was acquired by Mr Gordon or a companyby the name of Felbridge Auto Restorations Limited in which Mr Conlon andMr Gordon were the shareholders and directors, and which traded as a motor vehiclerestorer. I do not understand why. Whether the vehicle was acquired by Mr Gordonor by the company appears to me to be irrelevant to any issue in the case.[9] To cut a very long and remarkable story short, the Aston was sold to a Japanesebuyer in 1994. However, having been shipped to Japan, it was stolen whilst it wassitting on the wharf. The suspicion harboured by all parties is that the underlying saleand purchase arrangement was not legitimate, that the buyer was a member of theJapanese underworld and that the theft of the vehicle following its arrival in Japan wasa pre-meditated exercise.[10] Strenuous efforts were made to trace the Aston in the following years. Theseincluded Mr Gordon travelling to Japan in 2002 and confronting the alleged thief (andhis associates) at a warehouse where the car was stored. The net result of this exercisewas apparently that Mr Gordon was badly beaten. In 2007 the alleged thief was killed,and in 2008, the Japanese authorities finally recovered the Aston. Arrangements werethen made to repatriate it to New Zealand. However, understandably, by this stage,considerable costs had been incurred to the Japanese authorities and others and theseneeded to be paid before arrangements could be made to ship the vehicle back here.Obviously, there were also shipping costs involved.[11] It was at this point that Waimauri became involved. Effectively, the companywas approached to finance the repatriation of the Aston and that was the purpose ofthe 9 February 2009 loan.[12] The essential terms of the loan are summarised — accurately so far as I cansee — by Mr Edney in his principal affidavit as follows:19. The main details of the loan agreement were:(a) The loan amount was $70,000.(b) Repayment of the loan amount, together with a premium of$23,000, was due on 9 May 2009.(c) The lender was Waimauri.(d) The borrowers were Mr Gordon and Mr Conlon.(e) Mr Gordon executed the GSA in Waimauri's favour.[13] As Mr Edney says, the loan agreement was supported by security in the formof a general security agreement.[14] This was a very short-term loan at a very high interest rate.[15] The repayment date of 9 May 2009 came and went.[16] It is not altogether clear what engagement there was between Mr Edney on theone hand and Mr Conlon and Mr Gordon on the other hand between 9 May 2009 andthe date on which demand was ultimately made for repayment. The evidence as to theextent of exchanges between the parties is minimal. However, it is clear enough thatMr Edney took steps to keep himself appraised of what was going on and Mr Gordontook steps to sell the Aston so as to put himself in a position to repay the loan.[17] Demand was first made by Waimauri on Mr Gordon by letter dated 5 October2018, nine years after the debt is said to have fallen due. Demand was for the amountof $378,540.51. It was not paid.[18] Eventually, Mr Gordon appears to have secured a sale of the Aston to anAustralian buyer, although there are no details as to this, or what happened to theproceeds.[19] Mr Gordon died in July 2019.[20] Waimauri did not seek to rely on its general security agreement. It isunnecessary to consider why. A security holder is under no obligation to do so.[21] In any event, on 14 May 2020 Waimauri again made demand under theagreement on Mrs Gordon as the administrator of the estate of Mr Gordon, and thencommenced this proceeding early this year.[22] By the time Waimauri's summary judgment application came to be argued, theissues were well focussed and I am grateful to counsel for the care and attention thatthey obviously gave to the refinement of these.[23] Waimauri's case can be summarised briefly. It says that it entered into the loanagreement with Messrs Conlon and Gordon on 9 February 2009, that the principal andpremium provided for in the agreement was to be paid on 9 May 2009; that it was notpaid and that it is entitled to a judgment for that amount together with interest since9 May 2009 which in total it calculates — no doubt correctly — at $592,498.20[24] The defences that are put up by Mrs Gordon in her capacity as the administratorcome down to three:(a) First, it is said that Waimauri's claim is time-barred. Because theagreement was entered into on 9 February 2009, the Limitation Act1950 (as opposed to its successor, the Limitation Act 2010) applies.The 1950 Act provides that any claim on a simple contract must becommenced within six years. However, the Act also provides that aclaim pursuant to a deed may be commenced within 12 years. Thedefence put up here is that the 9 February 2009 agreement is a simplecontract, as opposed to a deed, and therefore that the claim istime-barred;(b) Second, it is contended that Waimauri has not established afundamental aspect of its claim, namely that it paid the principalamount of the loan to the borrowers or to their order. Clearly, if it didnot, then it did not discharge its part of the agreement, and has no claimagainst Mr Gordon's estate;(c) Third and finally, it is contended that Waimauri's delays in terms oftaking steps to enforce the agreement amount to oppression and that theCourt should exercise its right to refuse recovery on that basis.Is the loan arrangement of 9 February 2009 a deed?[25] The question of whether the law will treat a document as a deed raises twoissues:(a) First, whether the requirements of a deed as set out in s 9 of the PropertyLaw Act 2007 have been complied with; and(b) Second whether the parties' objectively determined joint intention wasthat the document should be treated as a deed.[26] It is common ground that the requirements of s 9 of the Property Law Act aremet in this case.[27] Accordingly, the only issue is the parties' objectively assessed joint intention.[28] The leading case is Morley v Spencer where Richardson J said:2In ascertaining the intent of the parties in determining the true character of atransaction in other respects the instrument must be considered as a whole inits factual matrix and having regard to the object. Extrinsic evidenceconcerning the words or acts of the parties as well as examination of the wordscontained in the document itself may assist in discerning the intent of theparties [29] Whether the document is intended to have present effect as a deed can only bedetermined by careful consideration of its content and language and the objectives ofthe parties as reflected in the instrument considered in its factual setting.2 Morley v Spencer [1994] 1 NZLR 27 (CA).[30] Mr Lenihan drew my attention to the comparatively recent judgment of thisCourt in Barry v Carlisle3 where Brown J concluded that an agreement prepared bythe parties without the assistance of solicitors was to be treated as a deed having regardto their joint intention. There, the document was headed "AGREEMENT ONPROPERTY AT WAIRAURI VALLEY". It described the property in respect of whichthe parties were contracted and continued:This letter is to confirm Lynda's legal right as a half owner in [description ofthe property]. In the event that Lynda requests a legal transfer of a half sharein the Certificate of Title to herself, THEN Francis shall sign all necessarydocuments and make the Certificate of Title to enable registration of thetransfer.[31] The attestation clauses in that document provided for the parties' execution ofthe document to be witnessed. Brown J's conclusion as to the status of the documentwas in these terms:4While clearly not the product of a solicitor, I consider that the document iscrafted in such a manner as a lay person might compose if endeavouring tocreate a document similar to one professionally prepared. In my view thestructure and the tone of the document, the manner of the description of theproperty, the subject matter and mode of execution collectively point to adocument which was not only intended to have legal effect but was alsoviewed as a formal and solemn arrangement.Viewed objectively, I consider that the Agreement dated 17 October 2002 wasintended to be a deed notwithstanding that neither party was then familiar withthe concept of a deed.[32] In this case, the parties were assisted by solicitors and they elected to use theAuckland District Law Society standard loan agreement. Furthermore, as Mr Lenihansubmitted, that document should not be viewed in isolation. It went hand in hand withthe security agreement executed for Waimauri's benefit. That was unquestionably adeed. These were serious commercial instruments and, in my view, appear to havebeen intended by the parties to articulate the serious commitments they were makingto each other.[33] Moreover, as Mr Edney said in his principal affidavit:3 Barry v Carlisle [2015] NZHC 1554, (2015) 16 NZCPR 449.4 At [103]–[104].17. I had the template of the loan agreement altered before I sent that andthe other documents to Mr Gordon and Mr Conlon for execution. Iwas wary of Mr Gordon, particularly after he asked to have thesecurity interest over the Aston Martin removed. I had the provisionfor signature in the loan agreement amended so that it provided for thesignatures of Mr Gordon and Mr Conlon to be witnessed. It did thisto try to stop Mr Gordon from later denying that he signed the loanagreement or otherwise disputing the validity of it. I am anexperienced property investor and am aware of what a deed is. Iwanted the loan agreement executed as a deed by being witnessed tobolster the position of Waimauri if Mr Gordon later disputed theagreement. At page 58 of the bundle is the front two pages of a blanktemplate of the loan agreement. When compared to the loanagreement as executed it shows the provision I had added to the loanagreement for the witnessing of it.[34] Whilst that evidence may be criticised as being direct evidence of Mr Edney'ssubjective intention, there is no doubt that the addition of the requirement that theborrowers' signatures be witnessed added a further layer of formality to thearrangement.[35] One further aspect of the background is relevant. The borrowers, Mr Conlonand Mr Gordon, executed the document in front of their bank manager and somebody— either the bank manager or the borrowers themselves — noted details of theborrowers' New Zealand passport numbers on the agreement.[36] I am quite satisfied that this is a situation in which the law should treat theagreement between the parties as a deed. All the requirements of the Property LawAct are met.5 The document records important commercial relationships between theparties. Plainly they treated the loan arrangement as a serious matter and intendedformally to record the commitments they were making to each other. I see this caseas being materially further along a continuum towards a deed than the document thatBrown J was dealing with in Barry v Carlisle. I am satisfied that Waimauri hasestablished that that there is no arguable time bar defence in this case because it canbring itself within the 12-year limitation period for a claim on a deed.5 Although I acknowledge McKay J's observation in Morley v Spencer, above n 2, at 37, that manycontracts are executed in a manner that would comply with the Property Law Act's formalities,even though they are not intended to operate as deeds, it is nonetheless a factor, which, incombination with other indicators, can lead to a finding that an agreement is in fact a deed.Can Waimauri establish that it paid the principal monies to the borrowers ortheir order?[37] There is a complete lack of the documentary evidence one usually expects tosee when an issue arises concerning whether monies were paid.[38] In an ideal case the affidavit evidence would include the contractualdocumentation providing for a payment, the vouchers created by a payor, payee orboth in relation to the payment of the money, and the bank records of payor or payeeor both demonstrating the flow of funds from one account to another. Here, as I say,there is none of that.[39] For Waimauri Mr Lenihan points to the fact that the loan was entered into some12 years ago, and that none of the records are said to exist. No doubt there is somethingin that.[40] However, as Mr Ironside contends on behalf of Mrs Gordon, it is hard to thinkthat no document of the sort I have described exists.[41] In the end, Mr Lenihan effectively asks the Court to infer that the moneychanged hands because Mr Gordon received the car back and would not have beenable to achieve that but for receipt of the funds from Waimauri.[42] It is quite possible to imagine that the Court may reach that conclusion at trial,but, in my view, it is asking too much to invite the Court to infer that on the basis ofuntested affidavit evidence on a summary judgment application. In short, I am notsatisfied that Waimauri can establish that this defence is not reasonably arguable.Does the delay in this case amount to oppression?[43] Mr Ironside's submissions in relation to this aspect of the case could never bedescribed as over-complicated.[44] As he pointed out, the essential facts are that the loan agreement was enteredinto in February 2009. It was intended to be a short-term loan of three months, withprincipal and interest to be repaid by May 2009. There is no evidence of a formaldemand having been made for repayment until October 2018 — nine years later.Mr Ironside says that that delay is "largely unexplained". That may be overstating theposition. It seems clear enough that there was at least occasional contact between theparties and that Waimauri was aware of Mr Gordon's efforts to sell the Aston. As hesubmits, however, the net effect is that a claim which, as at May 2009, stood at$70,000, ballooned into a claim of over $480,000 (as at May 2020).[45] Mr Ironside's essential submission is that these factors make the arrangementsbetween parties "unjustly burdensome" and unconscionable. He continues:At the very least, the defendant should be able to enquire further of the plaintiffas to the reasons for the delay. The lack of any record of demand, promptenforcement action, or notification to the borrowers of escalating interestcharges, are matters that the defendant is entitled to pursue. It will be for theCourt to assess all of the circumstances to determine whether in claiming thehigher interest rate for the full period from 9 May 2009, the plaintiff as lenderis seeking to enforce the agreement in an oppressive manner, and that asignificant and shorter period is both just and fair.[46] I agree.[47] Although I acknowledge Waimauri's submission that Mr Gordon wasobstructive throughout the process, or essentially ignored the loan, that strikes me asa dispute incapable of being properly resolved on affidavit evidence or at a summarystage. But more fundamentally, the fact a formal demand was not made until 9 yearsafter payment was due seems to at least raise the possibility that the defence that theenforcement of the loan was carried out in an oppressive manner for the purposes of s120 of the Credit Contracts and Consumer Finance Act 2003 cannot be ruled out. Thatis so despite the clause in the loan agreement which states delay does not affect thelender's rights.[48] Outside of limitation periods, there is of course no strict requirement for whena party must enforce a (common law) claim. And there is equally no fixed period ofdelay that will amount to oppression. Oppression is generally considered to mean abreach of reasonable standards of commercial practice,6 and in deciding whether toreopen a contract, the court must have regard to a large number of matters.7[49] While mere unfairness or difficulty performing a contract will not generallyamount to oppression,8 as I have said, the delay in this case at least raises thepossibility of oppression. And before a Court would be willing to rule on whether thedelay in a certain case is oppressive, evidence as to standard commercial practice withthese types of loans would be required.Conclusion[50] In my view, the plaintiff has not established that the defendant has no arguabledefence to this claim. It seems to me that she is entitled to put the plaintiff to proofboth as to whether it can persuade the Court that it paid the amount it says it paid toMr Gordon or his order, and also as to whether or not it is entitled to recover the fullamount of its claim or whether its actions amount to oppression. For those reasons, Idecline to make a summary judgment order.[51] In accordance with the Court's usual practice my preliminary view is that nocosts order should be made at this stage. However, given that I haven't heard fromcounsel as to costs I formally reserve them. If counsel have a difference of view as tothe way costs should be dealt with and cannot settle the issue, they may come back tothe Court by memoranda in the usual way.Associate Judge JohnstonSolicitors:Glasgow Harley, Nelson for PlaintiffBrown Partners, Auckland for Defendant6 See GE Custodians v Bartle [2010] NZSC 146, [2011] 2 NZLR 31 at [46].7 Credit Contracts and Consumer Finance Act, s 124.8 See for example Taylor v Westpac Banking Corp Ltd (1996) 7 TCLR 177, 104 (CA) at 184; ItaliaHoldings (Properties) Ltd v Lonsdale Holdings (Auckland) Ltd [1984] 2 NZLR 1 (HC) at 16.