Dobson v Milloy

[2014] NZHC 1631

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-463-000403 [2014] NZHC 1631

BETWEEN

KERRY BRYAN DOBSON

Plaintiff/Counterclaim Defendant

AND

HUGH MILLOY and HELEN RUTH MILLOY as Trustees of the HUGH MILLOY FAMILY TRUST

First Defendants/Counterclaim Plaintiffs

HUGH MILLOY and HELEN RUTH MILLOY as Trustees of the HELEN MILLOY FAMILY TRUST

Second Defendants/Counterclaim
Plaintiffs

CLUSEVAU HOLDINGS LIMITED Counterclaim Defendant

Hearing:

24 to 31 March 2014, 1 April 2014

Appearances:

Paul Dalkie and Greg Stringer for the Plaintiff/Counterclaim

Defendant

Robert Hollyman for the First and Second Defendants/ Counterclaim Plaintiffs

Judgment:

11 July 2014

RESERVED JUDGMENT OF MOORE J

This judgment was delivered by  on 11 July 2014 at 3:00pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Date:

DOBSON v MILLOY & ORS [2014] NZHC 1631 [11 July 2014]

CONTENTS

I       INTRODUCTION ..........................................................................................[1] II     THE PLAINTIFF’S CLAIM

Background .....................................................................................................[4] Law of Guarantees........................................................................................[31] Issues ..............................................................................................................[33] Is there an express or implied agreement for unequal sharing? ..............[34]

‘No Loss’ Agreement..............................................................................[34]

Reasons for finding a binding ‘no loss’ agreement did not exist...........[43]

2007 DOCI and 2009 loan agreement ..................................................[62] Is there a clear intention of unequal sharing?............................................[70] Is unequal sharing just? ...............................................................................[74] What is the appropriate amount of contribution?.....................................[77] Dobson and Reid Trust Agreement ........................................................[79] Interest payment ($50,000)....................................................................[85] Contribution to CMW payment .............................................................[90] Should relief be ordered? .............................................................................[94]

IIICOUNTERCLAIM Introduction.................................................................................................[100] Background .................................................................................................[102] The claim ..................................................................................................... [114] Nature of the funds ..................................................................................... [118] Distribution of the funds ............................................................................[130]

Breach by Clusevau - dishonest receipt ..............................................[131]

Breach by Clusevau - dishonest assistance .........................................[134] IV        SUMMARY OF CONCLUSIONS

The plaintiff ’s claim....................................................................................[152] The counterclaim ........................................................................................[154] Costs .............................................................................................................[156]

I         INTRODUCTION

[1]     Despite the complexity of the underlying facts, the central issue for determination  in  respect  of  the  plaintiff ’s  claim  is  the  proper  apportionment  of liability under a bank loan.

[2]      The plaintiff, Kerry Dobson, was required to sell his house due to his liability under a Westpac guarantee. Some of the funds obtained by the house sale were allocated by Westpac to the account of Hugh and Helen Milloy in their capacities as trustees  of  the  Hugh  Milloy  Family Trust  and  Helen  Milloy  Family Trust  (the defendants), who were also guarantors under the Westpac guarantee. Mr Dobson seeks to recover, in part or in full, the amount of the house sale proceeds. He makes this claim under the laws of contribution, a so-called ‘no loss’ agreement, ss 85 and

86 of the Judicature Act 1908, or alternatively under agreements made in 2007 and

2009.

[3]      The  defendant  trustees  have  brought  a  counterclaim  which  relates  to  a different business venture. It relates to litigation which involved two New Zealand companies with connections to Mr Reid and Mr Milloy. The dispute centres on what happened to funds connected with the litigation. The defendant trustees claim that Mr Dobson dishonestly received the funds or, alternatively, knowingly assisted in the distribution of the funds in breach of the fiduciary duties owed to the MRW Trust of which the Milloy…