Crown Finance Limited v Cronin - [2018] NZHC 2535

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-2725 [2018] NZHC 2535

BETWEEN
CROWN FINANCE LIMITED

Plaintiff

AND

TIMOTHY MORGAN FITZGERALD CRONIN

Defendant

Hearing: On the papers

Counsel:

I Denton and K Webster for the Plaintiff
No appearance for Defendant

Judgment:

27 September 2018

JUDGMENT OF MUIR J

This judgment was delivered by me on Thursday 27 September 2018 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:………………………….

Solicitors:
Wilson Harle, Auckland

Copy to: Defendant

CROWN FINANCE LIMITED v CRONIN [2018] NZHC 2535 [27 September 2018]

Introduction

[1] The plaintiff, Crown Finance Ltd (Crown), seeks judgment by default against the defendant, Mr Cronin.

Background

[2] Crown is a creditor of Malone No.5 Ltd, a single venture property developer. Mr Cronin was its director. Crown advanced a loan to Malone No.5 for the purposes of completing a property development, and Mr Cronin acted as its guarantor. The development ran into problems and Malone No.5 defaulted on its debt. Crown appointed a receiver, who completed the development and sold the properties. The proceeds of the sale did not cover the full amount outstanding. In proceedings filed on 15 November 2017, Crown sought to recover the balance of $762,278.81 (plus interest) from Mr Cronin under the contract of guarantee. The guarantee also provided that the plaintiff was entitled to indemnity costs associated with its recovery proceedings.

[3] In a judgment dated 1 June 2018, Associate Judge Bell gave summary judgment for part of the amount claimed.1 He directed that Mr Cronin file a statement of defence to the remaining claims by 25 June 2018. On 8 August 2018 Associate Judge Andrew extended this deadline by consent. He directed:

[a] The defendant is to file and serve his statement of defence within 10 working days and, if he fails to do so, his defence will be struck out and the plaintiff will be entitled to obtain judgment against him.

(emphasis in original)

[4] That deadline has now passed, and Mr Cronin has since advised that “I shall not be filing a defence”.2 Crown accordingly seeks judgment by default in the amount of $734,978 comprising the amount stated to be outstanding under the loan ($689,999) plus interest of $42,525.55 and costs of $2,453.00.

1 Crown Finance Ltd v Cronin [2018] NZHC 1289.
2 Email to the Case Manager dated 3 August 2018 at 4.03 pm.

Further inquiry

[5] I have since the request for judgment by default published two Minutes seeking clarification of aspects of the claim. In particular:

(a) I was unable to identify how the sum of $689,999 was calculated.

(b)Associate Judge Bell identified the claim as including default interest calculated at the rate of 20 per cent per annum on advances made to the receiver to complete the development. He said it was arguable such advances had not been made under the Term Loan Agreement which when they were made had expired. In that context…

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: [2018] NZHC 2535
Decision Date: 27 September 2018

CaseChat Overview and Summary

In the case of Crown Finance Limited v Cronin, the plaintiff, Crown Finance Limited, sought judgment by default against the defendant, Mr Cronin. Crown Finance was a creditor of Malone No.5 Ltd, a property developer, and Mr Cronin was its director and guarantor of its loan. After Malone No.5 defaulted on its debt, Crown Finance appointed a receiver who completed the property development and sold the properties. However, the proceeds of the sale did not cover the full amount outstanding, and Crown Finance sought to recover the balance from Mr Cronin under the contract of guarantee. The court had to decide whether the plaintiff was entitled to judgment by default and, if so, in what amount.

The court found that the plaintiff was entitled to judgment by default, but the amount owed by the defendant was less than claimed. The court was not satisfied that the plaintiff established its claim for $689,999, as the term loan agreement had expired and there was no evidence of a new and separate loan agreement. The court gave judgment for the alternative and reduced sum of $583,572.79, which the plaintiff calculated based on the loan amount, interest, advances to the receiver, and distributions by the receiver. The court also allowed the plaintiff's claim for costs of $1,561.

The final orders of the court were that judgment be entered in favour of the plaintiff and against the defendant in the sum of $583,572.79 plus interest from 27 September 2018 until satisfaction and costs of $1,561. The court also ordered that the plaintiff's claim for default interest from 29 September 2017 to the date of judgment be disallowed, as the plaintiff had not sought default interest for the same period in the context of this judgment.

Orders