Garnham v Garnham - [2018] NZHC 2937

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV 2018-485-702 [2018] NZHC 2937

BETWEEN
MICHAEL ROBERT GARNHAM

Appellant

AND

DAVID MARK GARNHAM AND GRAEME DAVID FALLOON as trustees of the Chameleon Trust, a trust created by deed of trust dated 21 February 2003

First Respondents

DAVID MARK GARNHAM Second Respondent

Hearing: 9 November 2018

Appearances:

D G Dewar for Appellant
K P Sullivan for Respondent

Judgment:

13 November 2018

JUDGMENT OF MALLON J

Introduction

[1] The appellant (Mike) and respondent (Mark) are brothers. In 2015 Mark advanced $150,000 and then a further $100,000 to Mike.1 Mike has repaid the
$150,000 but has not repaid the $100,000. The issue between them is whether the

1 There is a dispute between the parties as to whether the advances were made by Mark personally or by his trust. Initially Mike’s appeal was against Mark only. By consent the trust has been added as a first respondent and Mark is now named as the second respondent. The trust should have been a party to the appeal because the summary judgment was granted in favour of it. The evidence shows that the advance came from the trust’s account. The source of the funds is, however, not necessarily determinative of who the loan agreement was with. That said, I understand it is not necessary for me to rule on this dispute.

GARNHAM v GARNHAM [2018] NZHC 2937 [13 November 2018]

time for Mike to repay the $100,000 has been reached. There is no dispute that the loans were subject to interest.

[2] On a summary judgment application, the District Court found that Mike had no reasonably arguable defence to Mark’s demand for repayment of the $100,000 plus interest.2 Mike appeals that decision. He says the Judge was wrong to summarily dismiss his evidence that the $100,000 was not payable until Mike had funds from a Wanaka property development and this has not yet occurred.

The facts

[3] The two advances were made by Mark to Mike when Mike was in financial difficulty. It is not disputed that:

(a)On 9 March 2015 Mark agreed to lend $150,000 to Mike. Mike asked for the money to pay an Inland Revenue debt. At Mike’s request, Mark agreed to break a term deposit so that Mike would have the funds sooner than if he waited for funds from another source (proceeds from a sale of a property Mark owned would be available in a week or so).

(b)On 3 August 2015 Mark advanced a further $100,000 to Mike. Mike explained that he needed the advance because he still owed money to Inland Revenue.

(c)The terms on which the two sums were advanced were not formally documented.

(d) On 14 April 2016 Mike paid $10,000 at Mark’s request.

(e) On 16 September 2016 and 28 September 2016 Mike paid Mark
$150,000 (principal) and $25,066.09 (interest) respectively. These funds came from the sale of a commercial property (ASB Tower) in which Mike…

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 2937
Decision Date: 13 November 2018

CaseChat Overview and Summary

The High Court of New Zealand was asked to review a summary judgment made by the District Court in a case involving a loan between two brothers, Michael Robert Garnham and David Mark Garnham. Michael had borrowed $150,000 and $100,000 from David in 2015, which he had since partially repaid. The dispute centered around whether Michael was required to repay the remaining $100,000 plus interest. The court had to decide whether Michael had a reasonably arguable defense to David's demand for repayment.

The court examined the nature of the loan agreement, considering the lack of formal documentation and the informal communications between the brothers. It was evident that the loans were made during a period of financial difficulty for Michael, and the terms of repayment were not clearly defined. Michael argued that the repayment of the $100,000 was contingent on the success of a property development in Wanaka. However, the court found that the contemporaneous emails between the brothers did not support this claim, as there was no mention of such a condition at the time of the loan agreement. The court concluded that if there was no firm agreement on the repayment terms, the loan was repayable on demand, which had been made by David through his solicitors.

The court found that Michael's argument lacked a reasonable basis, as the evidence did not support his claim that the loan repayment was conditional on the success of the Wanaka property development. The court upheld the District Court's decision, dismissing Michael's appeal and affirming the summary judgment in favor of David. The respondents were awarded costs on a 2B basis, along with disbursements as fixed by the Registrar.

Orders