Commercial Metals Limited v Wright - [2015] NZCA 450

IN THE COURT OF APPEAL OF NEW ZEALAND

CA556/2014
[2015] NZCA 450

BETWEEN	COMMERCIAL METALS LIMITED Appellant
AND	HADLEY JOHN WRIGHT Respondent

Hearing:	18 August 2015
Court:	French, Simon France and Asher JJ
Counsel:	P F Dalkie for Appellant K T Glover and C P Hallowes for Respondent
Judgment:	21 September 2015 at 10.00 am

JUDGMENT OF THE COURT

AAn order is made substituting Commercial Metals Ltd for the original appellant, All Metals Trading Company Ltd.
BThe appeal is dismissed.
CThe appellant must pay the respondent costs for a standard appeal on a band A basis, and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Simon France J)

Introduction

The respondent, Mr Wright, is guarantor of a lease entered into between the appellant and a company with which Mr Wright is associated. Rent and outgoings due under the lease are unpaid. Commercial Metals Ltd brought proceedings against Mr Wright pursuant to the guarantee. The amount sought is $405,577.01. This is the equivalent of 12 months’ rent and outgoings and is the maximum amount Commercial Metals Ltd says it can recover from Mr Wright pursuant to the guarantee. Mr Wright disputes the quantum. Resolution of the dispute depends on the correct interpretation of the guarantee. Commercial Metals Ltd’s application for summary judgment was largely dismissed by Associate Judge Smith.[1] Commercial Metals Ltd now appeals against that refusal.[2]
[1]Mr Wright accepted some liability, albeit for a figure much lower than that being sought. Judgment was entered for this lesser sum.
[2]All Metals Trading Ltd v Wright [2014] NZHC 2136.
The principles applicable to a summary judgment application are not in dispute and were recently summarised in Sociedad Agricole Topagri Ltda v BBC Technologies Ltd:[3]
(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried.
(b)The onus is on the plaintiff, but where the plaintiff’s evidence is sufficient to show that there is no defence, the defendant will have to respond if the application is to be defeated.
(c)The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable.
(d)In the end, the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it.
(Footnotes omitted).
[3]Sociedad Agricole Topagri Ltda v BBC Technologies Ltd [2014] NZCA 253 at [9].
In dispute in this case is the meaning of the limitation component of a guarantee clause added to the standard Auckland District Law Society agreement to lease. It is common ground that the limitation was intended to cap Mr Wright’s liability, but the way by which it did this is contested. The relevant part of the clause…

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: [2015] NZCA 450
Decision Date: 21 September 2015 at 10.00 am

CaseChat Overview and Summary

Commercial Metals Limited sought to recover unpaid rent and outgoings from Hadley John Wright, who had guaranteed a lease entered into between his company and the appellant. The sum sought was $405,577.01, equivalent to 12 months' rent and outgoings, which the appellant argued was the maximum amount recoverable under the guarantee. The respondent disputed the quantum of the claim, and the case came before the Court of Appeal of New Zealand. The court had to determine whether the limitation component of the guarantee clause was a quantum or temporal cap on the respondent's liability.

The court held that the interpretation of the clause was not sufficiently beyond dispute for the purposes of a summary judgment application. The court noted that while the appellant's interpretation may have appeared more likely, the respondent's interpretation was not untenable. The court also observed that there were matters of context that would benefit from the hearing of evidence, such as the payment arrangements for the first six months of the lease and the appellant's financial situation at the time. The court found that the summary judgment application was correctly declined.

The appeal was dismissed, and the respondent was awarded costs for a standard appeal on a band A basis, and usual disbursements. Commercial Metals Limited was substituted for the original appellant, All Metals Trading Company Ltd, pursuant to section 225(f) of the Companies Act 1993.

Orders