IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2012-404-000802 [2012] NZHC 1902
UNDER The Judicature Act 1908
IN THE MATTER OF Application for Summary Judgment
BETWEEN FM CUSTODIANS LIMITED Plaintiff
ANDPENE PATI AND RICARDO OSCAR MARQUES AS TRUSTEES OF THE ARGEN FAMILY TRUST
Defendants
Hearing: 4 July 2012, and by memoranda 5, 11 and 12 July 2012
Counsel: H P Holland for plaintiff
D R Bigio for defendants
Judgment: 31 July 2012
JUDGMENT OF ASSOCIATE JUDGE ABBOTT
This judgment was delivered by me on 31 July 2012 at 5pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors:
S C Cowan, Bramwell Grossman, PO Box 500, Hastings
J Tam, Yang Lawyers, PO Box 99865, Newmarket, Auckland
Counsel:
H P Holland, Barrister, PO Box 128 224, Remuera
D R Bigio, PO Box 4338, Auckland
FM CUSTODIANS LIMITED V PENE PATI AND RICARDO OSCAR MARQUES AS TRUSTEES OF THE ARGEN FAMILY TRUST HC AK CIV 2012-404-000802 [31 July 2012]
[1] This decision concerns a dispute over costs following withdrawal of an application for summary judgment and a decision by the plaintiff to discontinue the proceeding because the loan that underlies the claim has been repaid.
Background
[2] The plaintiff, FM Custodians Limited, sued the defendants as guarantors of obligations under a loan agreement between it and Culverden Retirement Village Limited (the borrower).
[3] The defendants are the trustees of the Argen Family Trust (the trust). The borrower and the trust are associated entities (in a general sense) through family relationships and dealings with assets. The defendants are the registered proprietors of several properties within the Culverdon Retirement Village that were mortgaged as security for the loan. They gave a guarantee of the borrower’s obligations.
[4] The borrower defaulted under the agreement. It has since been placed into liquidation. The plaintiff took steps to recover the loan by exercising its power of sale as mortgagee of the various security properties and by suing the defendants. Towards this end, in November 2011 it issued the requisite notices under the Property Law Act 2007 and made demand on the defendants.
[5] The plaintiff commenced this proceeding on 17 February 2012 claiming
$2,715,294.04 as the sum due under the loan agreement as at 10 February 2012.
[6] In addition, following expiry of the time for remedying the defects in the Property Law Act notices, the plaintiff (together with mortgagees of the other properties making up the Culverden Retirement Village) proceeded to market the complex for sale as a whole.
[7] After issuing this proceeding, the plaintiff and the other mortgagees received and accepted an offer for the security properties. The sale settled on 21 June 2012. The proceeds of sale were sufficient to repay the plaintiff’s loan (as well as the loans
from the other secured lenders). Promptly after the sale of the security properties settled, the plaintiff informed the defendants that it was withdrawing its application and discontinuing the proceeding.
The claim for costs
[8] The defendants have applied…
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.
Continue reading FM Custodians Ltd v Pati
Sign in free to access the full text
Details
AGLC
FM Custodians Ltd v Pati [2012] NZHC 1902
Case
[2012] NZHC 1902
Decision Date
CaseChat Overview and Summary
FM Custodians Limited sued Pene Pati and Ricardo Oscar Marques as trustees of the Argen Family Trust for the amount of $2,715,294.04 due under a loan agreement. The defendants are guarantors of the obligations under the loan agreement, and the security for the loan comprises several properties within the Culverden Retirement Village. The borrower defaulted on the loan, and the plaintiff proceeded to sell the security properties and used the proceeds to repay the loan. The plaintiff then withdrew its application for summary judgment and discontinued the proceeding. The defendants have applied for costs of $10,447.80 under scale 2B in Schedule 3 to the High Court Rules, relying on the presumption in r 15.23 that costs should be paid by the discontinuing party. The plaintiff contends that the presumption is displaced in the circumstances of the case, and that it is just and reasonable that there be no order in the defendants' favour. In the alternative, the plaintiff challenges the quantum of costs being sought.
The Court held that although the plaintiff was entitled to pursue the defendants as guarantors at the same time as its other remedies, it was not reasonable to commence the proceeding before knowing whether there was a shortfall to recover from the defendants. The Court held that the presumption under r 15.23 was not displaced in the circumstances of this case. The Court also held that the new schedules should be interpreted by adding words to the effect that, in the case of proceedings commenced before the coming into force of the rules, the new schedules are only to apply to steps taken after that date, namely 14 June 2012. The Court made an order that the plaintiff pay the defendants costs on discontinuance in the total sum of $8,755.80.