FM Custodians Limited v Kooiman - [2017] NZHC 1783

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2017-485-343 [2017] NZHC 1783

BETWEEN
FM CUSTODIANS LIMITED

Plaintiff

AND

MICHAEL EDWIN KOOIMAN Defendant

Hearing: 24 July 2017

Counsel:

S D Munro and A L Davidson for Plaintiff j d Dallas for Defendant

Judgment:

31 July 2017

JUDGMENT OF ASSOCIATE JUDGE SMITH

[1] The plaintiff (FM) applies for summary judgment against the defendant (Mr Kooiman), on a written guarantee signed by Mr Kooiman on 19 March 2013 (the Guarantee).

Background

[2] On 19 March 2013, FM entered into a loan agreement (the loan agreement) with a company then called Ground Support (WGTN No. 1) Ltd. This company later changed its name to Ribble Ltd, and it is now in receivership. For convenience, I will refer to the company throughout this judgment as “Ribble”.

[3] The loan agreement between FM and Ribble provided for a loan up to a maximum principal sum of $995,000. The loan was to be repaid upon demand, and pending demand, by 14 March 2015. The loan was to be secured by “All existing
and future Securities from [Ribble] and/or [Mr Kooiman] to [FM]”.

FM CUSTODIANS LIMITED v KOOIMAN [2017] NZHC 1783 [31 July 2017]

[4] The loan agreement was secured by a mortgage registered on 22 March 2013 over a property owned by Ribble at Ribble Street, Island Bay, Wellington. Ribble also entered into a general security agreement (the GSA), on 19 March 2013. The GSA secured all advances made by FM to Ribble, including but not limited to the advance referred to in the loan agreement.

[5] On 19 March 2013, Mr Kooiman, who is the sole director of Ribble, signed the Guarantee.

[6] The Guarantee contained the following provisions:

2.1 Guarantee

The Guarantor unconditionally and irrevocably guarantees to the Lender the due payment by the Debtor of the Guaranteed Indebtedness and the due performance of and compliance by the Debtor with the Guaranteed Obligations.

2.2 Payment

The Guarantor undertakes that if, for any reason, the Debtor does not pay when due (whether by acceleration or otherwise) any Guaranteed Indebtedness, the Guarantor will pay the relevant amount immediately on demand by the Lender.

2.3 Unenforceability of Obligations

As a separate and continuing undertaking the Guarantor unconditionally and irrevocably undertakes to the Lender that, should the Guaranteed Indebtedness not be recoverable from the Guarantor under this Deed for any reason, including a provision of this Deed or an obligation (or purported obligation) of the Debtor to pay Guaranteed Indebtedness or to perform or comply with a Guaranteed Obligation being or becoming void, voidable, unenforceable or otherwise invalid, whether or not that reason is or was known to the Lender and whether or not that reason is:

a. a defect in or lack of powers of the Debtor or the irregular exercise of those powers;

b. a defect in or lack of authority by person purporting to act on behalf of the Debtor or the Guarantor; or

c. a legal or other limitation (whether under the Limitation Act

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: [2017] NZHC 1783
Decision Date: 31 July 2017

CaseChat Overview and Summary

FM Custodians Limited brought a summary judgment application against Michael Edwin Kooiman for the amount due under a written guarantee signed by Mr Kooiman on 19 March 2013. The dispute arose from a loan agreement between FM and Ribble, a company of which Mr Kooiman was the sole director, and which is now in receivership. The loan was secured by a mortgage and a general security agreement. Mr Kooiman signed a Guarantee of the loan, which did not specify any security documents. Mr Kooiman opposed the summary judgment application, arguing that the Guarantee was unenforceable because it did not list the loan agreement, the mortgage, or the general security agreement in the Schedule. The court found that the Guarantee was valid and enforceable, and granted summary judgment in favour of FM for the amount claimed plus interest. The court held that the Guarantee was intended to create stand-alone obligations on Mr Kooiman, separate and distinct from any obligations assumed under the loan agreement, the mortgage, or the general security agreement. The omission of these documents from the Schedule did not render the Guarantee incomplete or invalid. The court also found that s 27 of the Property Law Act did not require a guarantee to specify securities provided in order for the guarantee to be valid. The court reserved leave for Mr Kooiman to file a memorandum addressing FM's claims for costs.

Orders