Beggs v North Face Construction 2022 Limited - [2025] NZHC 552

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE

CIV-2023-454-90

[2025] NZHC 552

BETWEEN CHRISTOPHER DAVID BEGGS and LEONIE FRANCES BEGGS
Plaintiffs

AND

NORTH FACE CONSTRUCTION 2022 LIMITED

First Defendant

ANITA MAREE LANCASTER

Second Defendant

Hearing: 10 February 2025

Appearances:

S Barker for Plaintiffs

S Connolly for Defendants

Judgment:

18 March 2025

JUDGMENT OF ASSOCIATE JUDGE SKELTON

[1] The second defendant in this proceeding applies for summary judgment against the plaintiffs and/or strike out of the plaintiffs’ claims against her.

[2] On 20 May 2024, I dismissed the plaintiffs’ application for summary judgment against the second defendant as covenantor (the Judgment).1 In the Judgment, I set out the background between the plaintiffs and the defendants as follows:2

[6] On 21 March 2022, North Face Construction Ltd (NFC) entered into an agreement to sell its business to North Face Construction 2022 Ltd (NFC22) (ASP). The second defendant, Anita Lancaster, is the sole director

1 Beggs v North Face Construction 2022 Limited [2024] NZHC 1254. Summary judgment was granted against the first defendant unopposed.
2 At [6]-[13].

BEGGS v NORTH FACE CONSTRUCTION 2022 LIMITED [2025] NZHC 552 [18 March 2025]

and shareholder of NFC22. The plaintiffs are shareholders of NFC. Christopher Beggs is also a director of NFC.

[7]The ASP provided that:

(a)Part of the purchase price would be left in by way of vendor finance and subject to certain financial performance targets;

(b)To secure the loan, NFC22 would grant in favour of NFC a first ranking general security agreement.

(c)NFC as lender and NFC22 as borrower entered into a term loan agreement for the vendor finance (Loan Agreement). The second defendant signed the Loan Agreement as guarantor.

[8] It was a condition precedent of the loan advance that “[i]f any person is named in this agreement as a guarantor, the guarantor must have signed a deed of guarantee and indemnity …”. No separate deed of guarantee was signed by the second defendant.

[9] On 31 March 2022 a form of Auckland District Law Society (ADLS) general security agreement (GSA) was entered into by NFC and NFC22, incorporating the ADLS memorandum of general terms and conditions number 2018/4344 (General Terms) and the Loan Agreement by reference. The second defendant signed the GSA as covenantor. The loan advance was subsequently made.

[10] On 21 December 2022, NFC assigned its right, title and interest in the GSA and Loan Agreement to the plaintiffs. The second defendant signed as director of NFC22 and by herself personally.

[11] On 8 August 2023, NFC22 ceased to carry on business, a default under the GSA. On 16 August 2023, the plaintiffs sent a formal demand to the defendants for payment of the amount outstanding and payable under the Loan Agreement as at 16 August 2023, being the sum of $646,666 and for interest and solicitor-client costs.

[12] Since making the demand, the plaintiffs have exercised power of sale pursuant to the GSA against certain items of NFC22’s…

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: [2025] NZHC 552
Decision Date: 18 March 2025

CaseChat Overview and Summary

In the High Court of New Zealand, the plaintiffs, Christopher David Beggs and Leonie Frances Beggs, brought a claim against North Face Construction 2022 Limited and Anita Maree Lancaster, the latter being the sole director and shareholder of the former. The plaintiffs are shareholders of North Face Construction, and Christopher Beggs is also a director of that company. The second defendant applied for summary judgment against the plaintiffs or, in the alternative, an order striking out the first and/or second cause of action. The first cause of action contends that the second defendant is personally liable as guarantor, and the second cause of action is for specific performance, requiring the second defendant to execute a deed of guarantee and to disclose the whereabouts of certain assets of North Face Construction 2022 Limited. The second defendant argued that there was no written contract of guarantee as required by the Property Law Act 2007 and that the second cause of action for specific performance could not succeed because the Loan Agreement referred to the provision of the guarantee as a condition precedent to the advance of the loan. The Court held that the application for summary judgment or strike out was dismissed. The Court found it was at least arguable that the Loan Agreement may be interpreted as constituting a contract of guarantee and that it was arguable that the condition requiring the second defendant to sign a deed of guarantee and indemnity was not waived by the plaintiffs. The Court also found it was at least arguable that the condition has continued as a condition subsequent and may be enforced by an order for specific performance.

Orders