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Brougham v Regan

Brougham v Regan

Case [2020] NZSC 118 30 October 2020

Contract Formation

Unconscionable Conduct

Compensatory Damages

Specific Performance

Contract Law

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IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI

SC 104/2019
[2020] NZSC 118

BETWEEN	BRYCE BROUGHAM Appellant
AND	CHRISTINE ANNA ELIZABETH REGAN AND MARK JEFFEREY TUFFIN First Respondents RACHAEL CHRISTINA DEY Second Respondent

Hearing:	9 June 2020
Court:	Winkelmann CJ, William Young, Glazebrook, O’Regan and Williams JJ
Counsel:	F E Geiringer and J K Mahuta‑Coyle for Appellant F A King and M A Dempster for First Respondents S A McKenna for Second Respondent
Judgment:	30 October 2020

JUDGMENT OF THE COURT

A The appeal is allowed.
BThe orders made in the Court of Appeal are set aside and judgment is entered for the appellant.
CThe respondents must pay the appellant costs of $25,000 plus usual disbursements.

DThe award of costs and disbursements in the lower Courts in favour of the first respondents is set aside. Such costs and disbursements should be reassessed by the Court of Appeal in light of this judgment. The award of costs in favour of the second respondent stands.
EThe first respondents’ interlocutory application to adduce further evidence is dismissed.

____________________________________________________________________

REASONS
(Given by O’Regan J)

Guarantee “in writing”

The issue in this case is whether the appellant, Mr Brougham, is liable as a guarantor of a loan made by the trustees of the Winchester Trust (the trustees) to B & R Enterprises Ltd (the company).[1] The principal issue is whether the document signed by Mr Brougham complied with the requirement set out in s 27(2) of the Property Law Act 2007 that a contract of guarantee must be “in writing”.
[1]The first respondents are the current trustees of the Winchester Trust. At the relevant time the trustees were Ms Regan and her daughter, the second respondent, Ms Dey.
The case began in the District Court, which determined that Mr Brougham was not liable as guarantor.[2] That decision was upheld by the High Court.[3] The Court of Appeal allowed the trustees’ appeal to that Court and entered judgment against Mr Brougham for the principal of the loan together with interest and awarded indemnity costs.[4]
[2]Regan v Brougham [2016] NZDC 18553 (Judge Ross) [DC judgment].
[3]Regan v Brougham [2017] NZHC 1091 (Simon France J) [HC judgment].
[4]Regan v Brougham [2019] NZCA 401, [2020] 2 NZLR 299 (French, Collins and Wild JJ) [CA judgment] at [38]–[39]. Leave to appeal to the Court of Appeal was granted in Regan v Brougham [2018] NZCA 157. Simon France J had earlier dismissed an application for leave to appeal to the Court of Appeal: Regan v Brougham [2017] NZHC 2464.
This Court granted Mr Brougham leave to appeal, the approved question being whether the Court of Appeal was right to allow the appeal to that Court.[5]

Facts

[5]Brougham v Regan [2019] NZSC 143.

The loan made by the trustees to the company was recorded in a Term Loan Agreement (the loan agreement) which was on the printed Auckland District Law Society form.
The company was established shortly before the loan…

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 Brougham v Regan

Details

AGLC: Brougham v Regan [2020] NZSC 118
Case: [2020] NZSC 118
Decision Date: 30 October 2020

CaseChat Overview and Summary

The appeal was allowed and the orders made in the Court of Appeal were set aside, with judgment entered for the appellant. The Court held that the loan agreement did not constitute a contract of guarantee as required by s 27 of the Property Law Act, because the document did not contain any provision under which the appellant agreed to answer for the debt, default or liability of a third person. Consequently, the appellant was not liable as guarantor of the obligations of the company under the loan agreement. The Court also held that the purported guarantee was unenforceable because only one of the two named guarantors signed it. The respondents' argument that equitable estoppel could be invoked to overcome the failure to comply with s 27 was rejected. The Court found that the requirement of a signed guarantee document avoids doubts such as this arising. The respondents' application for specific performance of the appellant's obligation to sign a deed of guarantee and indemnity was dismissed. The Court held that there was no commitment made by the appellant in respect of which an order for specific performance could be made. The costs and disbursements awarded to the respondents in the lower courts were set aside and directed to be reassessed by the Court of Appeal in light of this judgment. Costs of $25,000 plus usual disbursements were awarded to the appellant. The respondents' interlocutory application to adduce further evidence was dismissed.

Orders