Crawford v Odin Enterprises Pty Ltd - [2009] NZCA 199

IN THE COURT OF APPEAL OF NEW ZEALAND
CA702/2008
[2009] NZCA 199

BETWEENCRAIG STIRLING CRAWFORD AND LOIS JEAN YELCICH

Appellants

ANDODIN ENTERPRISES PTY LTD, SARAH MARY ROBERTS AND RODERICK CHARLES JENDEN AND MARTIN VICTOR RICHARDSON AS TRUSTEES OF THE JENDEN BUSINESS TRUST

Respondents

Hearing:23 March 2009

Court:Chambers, Randerson and Potter JJ
Counsel:P T Finnigan for appellants

G J Toebes and B N White for respondents

Judgment:21 May 2009 at 4 pm

JUDGMENT OF THE COURT

A THE APPEAL IS DISMISSED.
BCosts are reserved.

________________________________________________________________
REASONS OF THE COURT
(Given by Potter J)
Introduction
[1]       The appellants are guarantors of a second mortgage in favour of the respondents secured over three properties at respectively Mangawhai, Matekohe and Ruawai which are owned by three mortgagor companies of which the appellants are directors.
[2]       By judgment dated 17 October 2008 (HC AK CIV 2008-404-581) Associate Judge Faire granted summary judgment against the appellants for $1,351,074.41, being the balance owing under the second mortgage after crediting the proceeds of the mortgagee sale of the Ruawai property by the respondents, plus interest at 29.5% from 30 January 2008.
[3]       The appellants contended the sale of the Ruawai property for $1.2m was at an undervalue. The Judge stayed execution of the judgment in respect of the sum of $629,500 and interest of 29.5% from 30 January 2008, on the basis that there was prima facie evidence of a sale at an undervalue by some $600,000, of the “home block” which comprised part of the Ruawai property, resulting in loss to the appellants.
[4]       It was made a condition of the stay that the appellants file and prosecute with due diligence proceedings against the respondents alleging breach of equitable duty owed by the respondents to the appellants to take reasonable care to obtain the best price reasonably obtainable for the home block at the time of sale. The appellants’ company, Ruawai Properties Limited, has now commenced that proceeding: Ruawai Properties Limited v Davies & Co Solicitors Nominee Company Limited and Odin Enterprises Pty Limited and Others HC AK CIV 2008-404-7634 (“the pending proceeding”).
[5]       The appellants appeal against the amount for which the stay was ordered.
Appellants’ position
[6]       The appellants contend the amount for which the judgment was stayed should have been $714,000 greater and that the Judge erred in rejecting the appellants’ contention that they had an arguable counterclaim under three additional heads, arising from the alleged failure by the respondents to obtain the best price reasonably obtainable for the Ruawai property.
[7]       The appellants say that if the value of these losses, $714,000, is added to the amount for which the stay was ordered, $629,500, the stay would be for approximately $1,343,000 which is near to the amount for which summary judgment was entered, namely $1,351,074.41. Therefore, it is contended, summary judgment should not have been entered, and the respondents should not be in a position to proceed in bankruptcy against the appellants until the proceeding against the respondents for alleged breach of equitable…

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: [2009] NZCA 199
Decision Date: 21 May 2009

CaseChat Overview and Summary

Craig Stirling Crawford and Lois Jean Yelcich, guarantors of a second mortgage secured over three properties, appealed against the amount for which a stay was ordered on a summary judgment granted in favour of Odin Enterprises Pty Ltd. The appellants contended the amount for which the judgment was stayed should have been $714,000 greater and that the judge erred in rejecting the appellants' contention that they had an arguable counterclaim under three additional heads, arising from the alleged failure by the respondents to obtain the best price reasonably obtainable for the Ruawai property. The respondents maintained Associate Judge Faire was correct to find there was no basis for the amount stayed to include any of the three additional heads of loss claimed. The Court of Appeal held that the appellants had failed to persuade the Court that the Judge erred in the exercise of his discretion in declining to increase the amount of the stay for the three items claimed. The appeal was dismissed and costs were reserved.

Orders