ASB Bank Limited v Sgargetta - [2018] NZHC 2066

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-788

[2018] NZHC 2066

BETWEEN
ASB BANK LIMITED

Plaintiff

AND

ELLIOT DANIEL SGARGETTA

Defendant

Hearing: On the papers, 29 May 2018

Appearances:

A E Simkiss and JJK Spring Defendant in person

Judgment:

14 August 2018

JUDGMENT OF WOODHOUSE J

(Interest and costs)

This judgment was delivered by me on 14 August 2018 at 12:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar

……………………………………

Solicitors / Parties:
Mr JJK Spring and Ms A E Simkiss, Minter Ellison Rudd Watts, Solicitors, Auckland Mr E D Sgargetta

ASB BANK LTD v SGARGETTA [2018] NZHC 2066 [14 August 2018]

[1] Following a defended hearing, summary judgment was entered for the plaintiff, ASB Bank Ltd (ASB), against the defendant, Mr Sgargetta.1 Judgment was entered for $598,340.15. There were further claims for interest and costs. Because I had not received full submissions on interest and costs, leave was reserved to ASB to file a memorandum on those matters and provision was made for a response from Mr Sgargetta, with the issues to be determined on the papers.2 This judgment determines ASB’s claims for further interest and for indemnity costs, both of which have been opposed by Mr Sgargetta.

The claim for further interest

[2] The judgment sum of $598,340.15 is for principal outstanding of $588,134.81 and interest calculated to 11 April 2017. ASB seeks further judgment for interest on the principal sum at a default rate of 22.50 per cent per annum from 12 April 2017 and a declaration that interest continues to accrue at the daily default interest rate until the date of payment.

[3] Mr Sgargetta’s liability arises under guarantees and indemnities in respect of loans made by ASB to Sleep Overs Ltd (in receivership and liquidation). Relevant background events are recorded in the substantive judgment.3

[4] Sleep Overs defaulted under the loan agreements in April and May 2015. Pursuant to the loan documents, and ASB’s General Terms and Conditions BRC06/2010 (the general terms) in particular, on default the total of all principal sums became due and payable. ASB submitted that, pursuant to clause 5.1 of the general terms, the default interest rate was, in consequence, payable on the total of the outstanding principal.

[5] Mr Sgargetta challenged ASB’s submission on the basis that clause 5.1 refers to an “unarranged overdraft” and, in essence, the only overdraft facility was for a sum

1      ASB Bank Ltd v Sgargetta [2017] NZHC 3097 (the substantive judgment).
2      The memoranda were filed in February and March 2018 but, inadvertently, were not referred to me until 29 May 2018, when I heard an application by Mr Sgargetta for stay of enforcement of judgment pending an appeal.
3      At [9]-[21].

of $50,000. Mr Sgargetta submitted that, if there is any liability for default interest, which he did not admit, it could only be on the overdraft limit of $50,000.

[6] Mr Sgargetta has misconstrued clause 5.1.…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] NZHC 2066
Decision Date: 14 August 2018

CaseChat Overview and Summary

The High Court of New Zealand delivered a judgment in the matter of ASB Bank Limited v Sgargetta. ASB Bank Limited sought summary judgment against Mr Sgargetta in the amount of $598,340.15, as well as claims for interest and indemnity costs. The court granted summary judgment for the principal amount, and the current judgment addresses the claims for interest and costs. The court had to determine whether ASB Bank Limited was entitled to interest on the principal sum at a default rate of 22.50 per cent per annum from 12 April 2017 and whether the defendant was liable to pay indemnity costs. The court held that Mr Sgargetta's liability arose under guarantees and indemnities in respect of loans made by ASB Bank Limited to Sleep Overs Ltd. Upon default, the total of all principal sums became due and payable, and ASB Bank Limited was entitled to default interest on the outstanding principal. The court further held that the contractual provisions binding on Mr Sgargetta entitle ASB Bank Limited to interest at the default rate of 22.50 per cent on the principal sum outstanding both before and after judgment. As for the costs, the court found that ASB Bank Limited was entitled to indemnity costs under the contractual documents, which established liability to pay all legal expenses on a solicitor and own client basis. The court determined that the indemnity costs sought by ASB Bank Limited were reasonably incurred, and there was an order that Mr Sgargetta pay $119,019.30 for legal costs and disbursements. The court reserved leave to ASB Bank Limited to apply for variation of the quantum of the costs order in respect of the GST component.

Orders