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Chadda v Singh

Chadda v Singh

Case [2024] NZHC 2318 19 August 2024

Contract Formation

Breach of Contract

Compensatory Damages

Unconscionable Conduct

Oppression

Jurisdiction

Contract Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-833

[2024] NZHC 2318

BETWEEN
NAVJOT CHADDA

Plaintiff

AND

GUPREET SINGH

Defendant

Hearing: 5 August 2024

Counsel:

T Newman for the Plaintiff A Nair for the Defendant

Judgment:

19 August 2024

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 19 August 2024 at 12 midday Pursuant to r 11.5 of the High Court Rules.

…………………..
Registrar/Deputy Registrar

Solicitors/Counsel:
Steindle Williams Legal, Auckland Nair & Associates, Auckland

CHADDA v SINGH [2024] NZHC 2318 [19 August 2024]

Introduction

[1] In July 2022, the defendant, Mr Singh, required funds to settle a purchase of a property at 55 Clarks Beach Road, Clarks Beach, Auckland (the property). Mr Singh had been unable to raise finance to complete the purchase, and he had negotiated an extension of the settlement date. Mr Singh was introduced to the plaintiff, Mr Chadda, who was prepared to provide bridging finance of $380,000 for a term of two months.

[2] On 18 July 2022, Mr Singh executed a loan agreement with Mr Chadda, recording a loan of $380,000 repayable on 18 September 2022 (the loan agreement). The ordinary interest rate was 4 per cent per month. The default interest rate was
16 per cent per month, compounding monthly. Mr Singh’s obligations were guaranteed by two companies associated with Mr Singh, Bhumi Holding Ltd (Bhumi) and Yasmine Holdings Ltd (Yasmine).

[3] On 18 July 2022, Mr Chadda’s solicitor transferred $364,019 to Mr Singh’s bank account. The balance of the advance of $380,000 was applied towards the first month’s interest of $15,200 and Mr Chadda’s legal costs.

[4] Mr Singh made further payments of interest of $15,200 to Mr Chadda on 2 August and 17 August 2022. Mr Singh failed to repay the advance of $380,000 on the due date of 18 September 2022.

[5] Mr Singh made further payments to Mr Chadda after his default, ostensibly of interest. The total amount paid by Mr Singh to Mr Chadda, excluding the amount deducted when the advance was made on 18 July 2022, is $111,200.

[6] In this proceeding, Mr Chadda seeks summary judgment against Mr Singh for the outstanding principal of $380,000 and default interest at the rate of 16 per cent per month, compounding monthly. Mr Chadda has commenced separate liquidation proceedings against Bhumi and Yasmine, on the grounds that those companies have failed to comply with statutory demands seeking the amount due under their guarantees.

[7] Mr Singh claims that Mr Chadda failed to comply with his statutory obligations as a creditor under a consumer credit contract, including the disclosure requirements prescribed in the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and registration as a provider of financial services under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSPA). Mr Singh argues that these failures by Mr Chadda render the loan agreement unenforceable, either under the CCCFA or as an illegal contract under s 73…

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 Chadda v Singh

Details

AGLC: Chadda v Singh [2024] NZHC 2318
Case: [2024] NZHC 2318
Decision Date: 19 August 2024

CaseChat Overview and Summary

In the case of Chadda v Singh, the plaintiff, Navjot Chadda, sought summary judgment against the defendant, Gupreet Singh, for an outstanding principal of $380,000 and default interest at a rate of 16% per month, compounded monthly. The loan agreement between the parties was executed on 18 July 2022, with Chadda providing a bridging finance of $380,000 to Singh for the purchase of a property in Clarks Beach, Auckland. The loan was to be repaid on 18 September 2022. Singh failed to repay the principal on the due date, leading Chadda to seek summary judgment. Singh opposed the application, arguing that the loan agreement was either a consumer credit contract or an illegal contract, that there had been oppression under the Credit Contracts and Consumer Finance Act 2003 (CCCFA), or that Chadda engaged in misleading or deceptive conduct.

The Court considered whether the loan agreement was a consumer credit contract, which would have prohibited Chadda from enforcing the agreement due to failure to comply with disclosure requirements and registration obligations under the CCCFA and the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSPA). The Court concluded that the loan was predominantly for investment purposes, not personal, domestic, or household use, and therefore was not a consumer credit contract. The Court also found that the failure to register under the FSPA did not render the loan agreement illegal or unenforceable.

The Court examined the claim of oppression under the CCCFA, considering factors such as the circumstances of the agreement, the relative bargaining power of the parties, and the terms of the loan agreement. The Court found that the higher default interest rate of 16% per month, compounding monthly, was arguable as oppressive, but the determination required factual findings not suitable for resolution at the summary judgment stage. The Court also noted that if the loan agreement were reopened for oppression, the principal sum would still be repayable.

The Court found that it was indisputable that Singh was in default for failing to repay the principal sum on the due date. Consequently, the Court entered summary judgment for the outstanding principal of $252,819, which was the principal amount after deducting the interest payments made by Singh. The Court also ordered that Chadda was entitled to an award of legal costs on an indemnity basis due to Singh's indisputable breach of his obligation to repay the principal. The parties were directed to file and serve cost memoranda if they could not agree on costs, after which the Court would determine the costs on the papers.

Orders