Gary Francis Haddon v G E Custodians

IN THE SUPREME COURT OF NEW ZEALAND

SC 87/2011
[2011] NZSC 121

BETWEEN GARY FRANCIS HADDON
Applicant

AND G E CUSTODIANS
First Respondent

AND BARBARA GALE HADDON AND BARBARA GALE HADDON IN HER CAPACITY AS TRUSTEE OF THE HADDON FAMILY TRUST
Second Respondents

Court: Elias CJ, McGrath and William Young JJ

Counsel: C S Henry for Applicant
E M S Cox for First Respondent

Judgment: 6 October 2011

JUDGMENT OF THE COURT

The application for leave to appeal is dismissed with costs to the first respondent of $2,500.

REASONS

This application for leave to appeal is brought by a mortgagor in default under a mortgage over his family home. The respondent finance company is mortgagee. The applicant brought this proceeding seeking to set aside the mortgage. In the High Court[1] an Associate Judge gave summary judgment in favour of the first respondent and dismissed the claim. The Court of Appeal[2] upheld that decision.
[1] GE Custodians v Haddon HC Auckland CIV-2009-404-6464, 2 July 2010.
[2] Haddon v GE Custodians [2011] NZCA 335.
The present application seeks to raise grounds for a further appeal under three main heads. First, there is a challenge to the finding of the Court of Appeal that the contract was not a credit contract, giving rise to obligations of disclosure that the applicant says were breached. We are, however, satisfied that no arguable issue meeting the criteria for leave to appeal arises from the Court of Appeal’s reasoning. That is also the position in respect of the complaint that the Court has allowed the first respondent to contract out of the Act.
Secondly, the applicant wishes to argue that the first respondent’s conduct was oppressive. It was not said that the terms of the loan were extortionate, nor that the first respondent induced the applicant to enter the transaction. Rather the argument is that the first respondent was aware that the loan would increase the applicant’s already extensive indebtedness. The applicant also says that the first respondent was aware that the borrowers did not receive independent legal advice and was put on inquiry as to their lack of means to meet the mortgage outgoings. In the Court of Appeal the submissions on oppression failed on the facts. The Court of Appeal held the first respondent had reason to be satisfied about the capacity of the parties to service the loan. They had also been apprised of the risks involved. Overall, we are satisfied no question of public importance arises. Nor does any apparent miscarriage of justice. Any appeal would simply be a further factual inquiry into the argument over oppressive conduct.
That leaves as the final question the applicant’s contention that it should be entitled to discovery before facing a summary judgment application. Having regard to the provisions of the legislation, we do not see that in the circumstances of a case where the loan was advanced at the borrowers’ initiative, and no question of inducement or misrepresentation arises, that is a necessary or appropriate course.
Accordingly we dismiss the applications for leave to appeal and for stay of execution of the Court of Appeal’s judgment.

Solicitors:
Witten-Hannah Howard, Takapuna for Applicant
Gibson Sheat, Lower Hutt for First Respondent

CaseChat Overview and Summary

In the Supreme Court of New Zealand, the case of Gary Francis Haddon v G E Custodians saw the applicant, Haddon, appealing against the decision of the Court of Appeal that dismissed his claim to set aside a mortgage over his family home. The first respondent, G E Custodians, is the mortgagee, while the second respondents are Barbara Gale Haddon and Barbara Gale Haddon in her capacity as trustee of the Haddon Family Trust. The court was presided over by Elias CJ, McGrath, and William Young JJ. Haddon sought to set aside the mortgage after defaulting on his payments, but the High Court and the Court of Appeal both dismissed his claim. Haddon's application for leave to appeal to the Supreme Court was subsequently dismissed, with costs awarded to the first respondent.

The primary legal issues before the Supreme Court were whether the Court of Appeal had correctly determined that the contract was not a credit contract, whether the first respondent's conduct was oppressive, and whether Haddon was entitled to discovery before facing a summary judgment application. The Court of Appeal had ruled that the contract was not a credit contract, and thus did not trigger the obligations of disclosure. The Court of Appeal also found that the first respondent's conduct was not oppressive, as they were satisfied that the borrowers had been informed of the risks involved and the capacity to service the loan. Lastly, the Court considered whether Haddon should be entitled to discovery before facing a summary judgment application. However, the Supreme Court found that in the circumstances of this case, where the loan was advanced at the borrowers' initiative and no question of inducement or misrepresentation arose, such a course was neither necessary nor appropriate.

The Supreme Court dismissed the application for leave to appeal and for a stay of execution of the Court of Appeal's judgment. The reasoning of the Court of Appeal was upheld, finding that no arguable issue meeting the criteria for leave to appeal arose from their reasoning. Furthermore, the Court found that no question of public importance or miscarriage of justice existed. The Court held that any appeal would simply be a further factual inquiry into the argument over oppressive conduct, which had already been determined by the Court of Appeal. As a result, the application for leave to appeal was dismissed with costs to the first respondent of $2,500.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established