Clode v Sullivan - [2017] NZCA 548

IN THE COURT OF APPEAL OF NEW ZEALAND

CA398/2016
[2017] NZCA 548

BETWEEN

BRENT DOUGLAS CLODE
First Appellant

SYNERGY MANAGEMENT LIMITED
Second Appellant

AND

MICHAEL GRANT SULLIVAN AND DUTHCO TRUSTEES (SULLIVAN) LIMITED AS TRUSTEES OF THE SULLIVAN FAMILY TRUST NO 1
Respondents

Hearing:	4 September 2017
Court:	Asher, Courtney and Gendall JJ
Counsel:	First Appellant in Person SCDA Gollin and M D Pascariu for Respondents
Judgment:	28 November 2017 at 10.30 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellants must pay the respondents costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Courtney J)

Introduction

This appeal arises from the sale of a partially completed apartment development in Mount Wellington, Auckland. The first appellant, Brent Clode, had an interest in the company that owned the development. Prior to the sale he entered into a settlement agreement with the purchasers of the development, who are the respondent trustees. They subsequently asserted that they had been induced to enter the agreement by Mr Clode’s misrepresentations that he owned the “intellectual property” in the development and had security over documents that were essential to its completion.
At the relevant time the development was owned by Thompson Park Holdings Ltd (TPHL). Mr Clode was the beneficial owner of 50 per cent of the shareholding in TPHL. The legal owner of the shares was David Jans, TPHL’s sole director. In mid-2014 TPHL’s existing loan fell due. It was unable to either repay or refinance and was served with a default notice under s 119 of the Property Law Act 2007 (PLA).
The respondents, Michael Sullivan and Duthco Trustees (Sullivan) Ltd, were the trustees of the Sullivan Family Trust No 1, a family trust associated with Mr Sullivan. They offered to buy the development for the amount needed to clear the debt. But there would be no ongoing role for Mr Clode, who would lose his share of the potential profit to be made from TPHL’s involvement in the development. He was anxious to extract some financial return on his involvement in TPHL.
Mr Clode negotiated a settlement agreement with the trustees under which he would receive benefits in cash and property to a total value of $1,055,000. That agreement was concluded on 3 July 2014. Initially, he negotiated on the basis that, by virtue of his interest in TPHL, he had the right to influence TPHL’s decision to sell the development. Soon afterwards he also asserted that assets he styled as “intellectual property” associated with the development belonged to him or his company and that TPHL had agreed to buy them from him and, further, that this agreement was secured by a mortgage to him over various “material contracts”, including the resource consent, which were essential to completion of the development. In this regard he put forward documents described as professional services agreements (PSAs) and deeds of assignment by way of mortgage of material contracts. The documents had been executed shortly…

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 Clode v Sullivan

Details

AGLC: Clode v Sullivan [2017] NZCA 548
Case: [2017] NZCA 548
Decision Date: 28 November 2017 at 10.30 am

CaseChat Overview and Summary

The appeal arises from the sale of a partially completed apartment development in Mount Wellington, Auckland. The first appellant, Brent Clode, had an interest in the company that owned the development, Thompson Park Holdings Ltd (TPHL). He was anxious to extract some financial return on his involvement in TPHL. He negotiated a settlement agreement with the respondents, Michael Sullivan and Duthco Trustees (Sullivan) Ltd, who were the trustees of the Sullivan Family Trust No 1, a family trust associated with Mr Sullivan. They offered to buy the development for the amount needed to clear the debt. The agreement was concluded on 3 July 2014. Mr Clode asserted that he owned the “intellectual property” in the development and had security over documents that were essential to its completion. The respondents failed to fulfil the terms of the settlement agreement and Mr Clode brought a claim against the trustees and a counterclaim by the trustees against Mr Clode. Palmer J held that Mr Clode had induced the trustees to enter into the settlement agreement through misleading and deceptive conduct in breach of s 9 of the Fair Trading Act 1986 (FTA). The Judge made an order that the settlement agreement was void and ordered Mr Clode to repay the $150,000 he had received under the settlement agreement. Mr Clode appeals Palmer J’s judgment.

The appeal raises several issues, including whether the Judge’s finding of misleading and deceptive conduct was an error, whether the Judge erred in finding that the trustees were misled or deceived, whether the Judge wrongly assumed or found that the trustees had suffered loss as a result of Mr Clode’s conduct and whether the Judge failed to properly exercise his discretion under s 43 of the FTA. The Court found that the Judge’s findings were correct and that the relief granted was justified. The appeal was dismissed. The appellants must pay the respondents costs for a standard appeal on a band A basis and usual disbursements.

Orders