Bishop v Financial Trust Ltd - [2008] NZCA 170

IN THE COURT OF APPEAL OF NEW ZEALAND
CA160/07
[2008] NZCA 170
BETWEENJOAN ELIZABETH BISHOP

First Appellant
ANDDONALD JOHN BISHOP

Second Appellant
ANDEMMA CATHERINE FURSMAN

Third Appellant
ANDDAVID ANTHONY TOBIN

Fourth Appellant

ANDFINANCIAL TRUST LIMITED

Respondent

Hearing:29 May 2008

Court:O'Regan, Arnold and Ellen France JJ
Counsel:J A Langford for Appellants

G M Sandelin and M D Pascariu for Respondents

Judgment:18 June 2008 at 2.30 pm

JUDGMENT OF THE COURT

A We dismiss both the appeal and the cross-appeal.
BWe award to FTL costs of $2,000 plus two-thirds of its usual disbursements.

REASONS OF THE COURT
(Given by O’Regan J)
Payment demanded from guarantors
[1]       The appellants are guarantors of the obligations of BFA Development Company Limited (in receivership) (BFA) to the respondent, Financial Trust Limited (FTL), in its capacity as Trustee of the Financial (No. 3) Trust.
[2]       BFA undertook a major property development in Wellington which was unsuccessful, and, after a mortgagee sale of the development property a substantial shortfall remained.
[3]       FTL demanded payment of the shortfall from the appellants as guarantors: at the time of the High Court case the amount outstanding was nearly $3.4 million, with interest accruing. The appellants did not meet the demand. FTL sought summary judgment against the appellants, in the High Court. The case was heard by Associate Judge Gendall, and FTL was successful: Financial Trust Ltd v Bishop HC WN CIV 2006-485-2321 3 April 2007. The appellants appeal against that judgment.
Issues
[4]       The focus of the appeal was on the effectiveness of the assignment to FTL by the original lender Securities Registry Limited (SRL) of SRL’s rights against BFA and the appellants as guarantors, and in particular whether proper notice of that assignment had been given in terms of s 130 of the Property Law Act 1952 (the assignment preceded the coming into force of the Property Law Act 2007). The appellants contend that proper notice was not given, because the purported notice predated the effective date of the assignment. The respondents argue that the notice was sufficient and, in the alternative, if it was not sufficient then subsequent actions on its part constituted notice. The issue for determination in the appeal is, therefore, whether the respondents have satisfied the Court that the appellants do not have a defence based on a failure to give notice of the assignment under s 130.
[5]       FTL cross-appealed against the award of costs in the High Court on a 2B basis. It contends that it was entitled to an award of costs equal to its actual costs, as specified in the Deeds of Guarantee executed by each appellant. That is the sole issue in the cross-appeal.
[6]       Before considering these issues, we will set out the factual background, and the approach which the Associate Judge took to the issues.
Facts
[7]       The factual background was fairly and succinctly outlined in the Associate Judge’s judgment, and we reproduce his summary (with minor amendments) in the paragraphs which follow.
[8]       In January 2003 and October…

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: [2008] NZCA 170
Decision Date: 18 June 2008

CaseChat Overview and Summary

In the Court of Appeal of New Zealand, the appellants, Joan Elizabeth Bishop, Donald John Bishop, Emma Catherine Fursman, and David Anthony Tobin, appealed against a summary judgment awarded to the respondent, Financial Trust Limited (FTL), in the High Court. The appeal was dismissed, and the cross-appeal was also dismissed. The court awarded FTL costs of $2,000 plus two-thirds of its usual disbursements.

The primary issue in the appeal was whether the assignment of rights from Securities Registry Limited (SRL) to FTL was effective, and if proper notice of this assignment had been given to the appellants in terms of s 130 of the Property Law Act 1952. The appellants argued that proper notice was not given as the notice predated the effective date of the assignment. On the other hand, FTL argued that the notice was sufficient and, in the alternative, subsequent actions on its part constituted notice. The issue for determination in the appeal was whether FTL had satisfied the court that the appellants do not have a defence based on the failure to give notice of the assignment under s 130.

FTL cross-appealed against the award of costs in the High Court on a 2B basis, contending that it was entitled to an award of costs equal to its actual costs, as specified in the Deeds of Guarantee executed by each appellant. The sole issue in the cross-appeal was whether FTL was entitled to an award of its actual costs.

The Court found that the 28 November 2003 letter did not constitute effective notice, as it was given before the assignment took place. However, the Deeds of Variation, when read in tandem with the 28 November 2003 letter, satisfied the requirements for the giving of notice under s 130 of the Property Law Act. The Court concluded that FTL had established that the defence postulated by the appellants could not succeed at trial, and in those circumstances, the Associate Judge was correct to enter summary judgment against the appellants. The appeal therefore failed.

Regarding the cross-appeal, the Court found that the award of costs on a 2B basis yielded a fair outcome in the circumstances, and it did not allow the cross-appeal. The Court awarded FTL costs of $2,000 plus two-thirds of its usual disbursements.

Orders