Baxter v Murray - [2020] NZCA 222

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA557/2019
[2020] NZCA 222

BETWEEN	ANTHONY CANNON BAXTER First Appellant WILLY LEFERINK Second Appellant
AND	EMMA MARY MURRAY, WAYNE DEREK ANDERSON and FOUR S TRUST LIMITED as trustees of the Four S Trust and CRAIG ROBERT WILLIAM BRYDON, DARELLE JANISE BRYDON and JEFFREY HOLLIS STRETTON as trustees of the Craig & Danielle Brydon Family Trust and S.A.S. TRUSTEE COMPANY LIMITED and TRUSTS LIMITED all former shareholders of JLE Holdings Limited Respondents

Hearing:	19 May 2020
Court:	Brown, Venning and Simon France JJ
Counsel:	D J Ballantyne for Appellants C A Murphy for Respondents
Judgment:	8 June 2020 at 11.30 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellants are to pay the actual and reasonable costs of the respondents on this appeal on an indemnity basis in accordance with cl 2.1 of the Variation Agreement.
____________________________________________________________________

REASONS OF THE COURT

(Given by Venning J)

Introduction

Anthony Baxter and Willy Leferink (the appellants) guaranteed the performance of Zeecol Finance LLC (Zeecol) under a Variation Agreement (Variation). The Variation varied an earlier sale and purchase agreement (SPA) and subsequent loan agreement between Zeecol and the respondents.
Zeecol defaulted. The respondents made demand of the appellants. The appellants failed to pay. The respondents applied for summary judgment. Associate Judge Andrew entered judgment against the appellants for USD 713,428.36, together with interest and costs.[1]
[1]Murray v Baxter [2019] NZHC 2444.
The appellants say the Judge was wrong to enter summary judgment as they have an equitable set-off to the respondents’ claim. Alternatively, they say the Judge should have exercised his discretion not to enter judgment. The appellants seek orders allowing the appeal and setting aside the judgment.

Factual background

The factual background is not in dispute. The appellants accept it is correctly set out in the following passages from the Judge’s decision:
[7]       The [respondents], in their capacity as trustees of several independent trusts, are the former owners of an electrical services business (the sellers) operated by a company called JLE Holdings Ltd (JLE).
[8]       In about mid-2017, the [respondents] decided to sell their shareholding in JLE.
[9]       In September 2017, [Zeecol] bought the shares in JLE. The sale of the shares required USD 1,000,000 in vendor finance which was recorded in a sale and purchase agreement (the SPA). The parties to the SPA were Zeecol, [the respondents] and Mr William Farry Mook, as Covenantor. At the time the SPA was signed on 22 September 2017, the [appellants] were not a party to it.
[10]     Clause 7.1 of the SPA provides for a working capital adjustment that has the potential to require a payment from [Zeecol] to the [respondents] or a payment from the [respondents] to [Zeecol].
[11]     Clause 13.18 of the SPA reads:
No right of set-off
Unless this Agreement expressly provides otherwise, a party has no right of set-off, withholding or deduction from or against a payment due to another party.
[12]     In December…

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.

Continue reading Baxter v Murray

Details

AGLC: Baxter v Murray [2020] NZCA 222
Case: [2020] NZCA 222
Decision Date: 8 June 2020 at 11.30 am

CaseChat Overview and Summary

The Court of Appeal of New Zealand heard an appeal brought by Anthony Cannon Baxter and Willy Leferink (appellants) against a decision of Associate Judge Andrew, who had granted summary judgment in favour of the respondents, Emma Mary Murray, Wayne Derek Anderson, and others (respondents). The appeal concerned the enforceability of a Variation Agreement (Variation) between Zeecol Finance LLC (Zeecol) and the respondents, where the appellants had guaranteed Zeecol's obligations under the Variation. Zeecol defaulted on its payment obligations, prompting the respondents to demand payment from the appellants, who subsequently failed to pay. The respondents applied for summary judgment, which was granted against the appellants.

The primary legal issues before the Court of Appeal were whether the appellants could raise an equitable set-off against the respondents' claim and if the Judge was in error by not exercising his discretion to dismiss or adjourn the summary judgment application or in declining to grant a stay of execution on the grounds of injustice or abuse of process. The Court of Appeal found that the appellants' right of set-off had been contractually excluded, either expressly or by clear implication, in the Sale and Purchase Agreement (SPA) and the Variation. The Court held that the Variation incorporated the terms of the SPA, including the exclusion of the right of set-off. Consequently, the appellants could not rely on the working capital adjustment to assert an equitable set-off. The Court of Appeal further determined that the appellants had failed to discharge the onus on them to show there was any likelihood of a miscarriage of justice in the entry of summary judgment in this case. As such, the Judge was correct not to exercise his discretion against entering judgment and not to direct a stay of execution.

The Court of Appeal dismissed the appeal and ordered the appellants to pay the actual and reasonable costs of the respondents on this appeal on an indemnity basis in accordance with clause 2.1 of the Variation Agreement.

Orders