BMW Financial Services New Zealand Limited v Cotton - [2021] NZHC 854

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-002343

[2021] NZHC 854

BETWEEN BMW FINANCIAL SERVICES NEW ZEALAND LIMITED
Plaintiff

AND

MARTIN NEWELL RAINE COTTON

Defendant

Hearing: 21 April 2021

Appearances:

R Langdana for Plaintiff

No appearance for Defendant

Judgment:

21 April 2021

ORAL JUDGMENT OF VENNING J

Solicitors: Paul Davies Law Limited, Auckland Counsel: J Long/R Langdana, Auckland Copy to: Defendant

BMW FINANCIAL SERVICES NZ LTD v COTTON [2021] NZHC 854 [21 April 2021]

[1] The plaintiff, BMW Financial Services New Zealand Limited, seeks judgment for the recovery of a debt owed to it by the defendant, Martin Newell Raine Cotton.

[2] The plaintiff commenced these proceedings and applied for summary judgment against Mr Cotton in December 2020. The claim is based on a guarantee provided by Mr Cotton.

[3] Mr Cotton initially filed a notice of opposition to the plaintiff’s application on the day the matter was first called in the summary judgment list. The proceedings have been subsequently called on two further occasions. At the last of those calls on 23 March Gault J noted the file that while the plaintiff had sought judgment because Mr Cotton had failed to file any affidavit to support his opposition the Judge considered it appropriate to allocate a formal proof hearing. That formal proof hearing has been convened and heard this morning.

[4] At the outset of the hearing Mr Cotton was called. There is no appearance of or for Mr Cotton.

[5] The background can be stated shortly. It is a relatively straightforward commercial arrangement. The plaintiff carries on business throughout New Zealand as a financial services provider and lends money to, amongst other things, enable customers to purchase motor vehicles. At relevant times the defendant was a company director of a company MSLN Limited.

[6] By a written agreement dated 27 May 2016 the plaintiff entered a loan agreement with Mr Cotton’s company MSLN Limited. The loan agreement was part of a sale and purchase agreement where MSLN Limited had purchased a new Audi R8 Coupe car. Relevantly for present purposes, Mr Cotton the defendant, guaranteed the payment of all amounts MSLN Limited owed to the plaintiff under the loan agreement. Under the loan agreement the plaintiff advanced $354,645 to MSLN Limited for the purposes of purchasing the vehicle. MSLN Limited granted a security, agreed to pay monthly instalments, and as noted, Mr Cotton the defendant guaranteed the due and

punctual payment of all the amounts owing by the company MSLN Limited. The advance was made on 27 May 2016.

[7] MSLN Limited fell into default as at 27 July 2017 and remained in arrears. The defendant acknowledged the arrears and informed the plaintiff that he would sell the vehicle and apply the proceeds to his debt.

[8] On 27 February 2018 Mr Cotton sold the car to Continental Cars and applied the proceeds of $191,161.34 to reduce the loan balance. The plaintiff proposed a restructured repayment plan…

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 BMW Financial Services New Zealand Limited v Cotton

Details

AGLC: BMW Financial Services New Zealand Limited v Cotton [2021] NZHC 854
Case: [2021] NZHC 854
Decision Date: 21 April 2021

CaseChat Overview and Summary

In the case of BMW Financial Services New Zealand Limited v Cotton, the plaintiff, BMW Financial Services New Zealand Limited, sought a judgment for the recovery of a debt owed by the defendant, Martin Newell Raine Cotton, who had guaranteed a loan provided by the plaintiff to his company, MSLN Limited. The plaintiff applied for summary judgment in December 2020, as the defendant had failed to file any affidavit in opposition. The proceedings were initially adjourned for a formal proof hearing, but the defendant did not appear at the hearing, nor was there any representation for him. The defendant had executed a loan agreement in 2016 for the purchase of a motor vehicle, guaranteeing the payment of all amounts owed by MSLN Limited. The company fell into default in 2017, and after the defendant made some payments, he defaulted again in July 2018. The defendant opposed the application for summary judgment, citing responsible lending issues and claiming he had lost his home, business, and marriage but was not provided with adequate assistance by the plaintiff. However, the court found that the defendant's claims were unsupported by evidence, and there was no arguable defence to the plaintiff's claim. The court held that the transaction was a business-to-business loan and not subject to the responsible lending obligations under the Credit Contracts and Consumer Finance Act 2003. As a result, the plaintiff was granted judgment in the sum of $145,543.58, which included the principal sum, enforcement costs, and costs on a 2B basis.

The court considered the legal issues related to the defendant's opposition to the summary judgment application. The defendant argued that the plaintiff had not complied with responsible lending obligations, as he had not completed an application form for the loan and was not provided with adequate assistance despite his personal difficulties. However, the court found that there was no evidence to support these claims. Furthermore, the court held that the responsible lending obligations under the Credit Contracts and Consumer Finance Act 2003 did not apply to the transaction, as it was a business-to-business loan guaranteed by a natural person. The court also noted that it was stretching credibility for the defendant to suggest that, as a director of a company, he would enter into a loan agreement for a substantial sum of money without knowing the obligations involved, especially since the obligations under the borrowing were met for a significant period of time before the default. The court concluded that there was no arguable defence to the plaintiff's claim and that the defendant was liable for the debt owed to the plaintiff.

In summary, the court granted judgment to the plaintiff, BMW Financial Services New Zealand Limited, in the sum of $145,543.58, which included the principal sum, enforcement costs, and costs on a 2B basis. The defendant, Martin Newell Raine Cotton, was held liable for the debt owed to the plaintiff under the loan agreement, which he had guaranteed. The court found that there was no arguable defence to the plaintiff's claim and that the defendant's opposition based on responsible lending issues was unsupported by evidence. The court also held that the responsible lending obligations under the Credit Contracts and Consumer Finance Act 2003 did not apply to the transaction, as it was a business-to-business loan.

Orders