George v Dilks - [2015] NZHC 3060

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-2139 [2015] NZHC 3060

BETWEEN
ARIANA CAILEEN GEORGE

First Plaintiff

AND

RODNEY LEE TE WAKA TOTO HOLLAND

Second Plaintiff

AND

PAUL DILKS Third Defendant

Hearing: 7 October 2015

Appearances:

P M Webb for Plaintiffs
No appearance for Third Defendant

Judgment:

4 December 2015

JUDGMENT OF KEANE J

This judgment was delivered by me on 4 December 2015 at 11am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Denham Bramwell, Manukau, Auckland

GEORGE v DILKS [2015] NZHC 3060 [4 December 2015]

[1] On 13 February 2007 Ariana George, then a teacher, entered into two agreements with Sell Smart.Biz Limited. Under the first she purchased a licence to sell tourism advertising using touch screen electronic kiosks owned by Sell Smart and, under the second, she purchased the related Touch NZ franchise for $105,000: a
$50,000 deposit and $55,000 by instalments to be agreed later.

[2] ANZ, from which Ms George and her then partner, Rodney Holland, had recently borrowed to buy their Manukau home, was unwilling to assist them. They refinanced their mortgage with Tea Custodians (Bluestone) Limited; and to do that had also to buy out Mr Holland’s mother, with whom they owned their property jointly in shares.

[3] In this, Ms George contends, she relied on assurances from Sell Smart’s shareholder and director, David Padfield, and the mortgage broker he recommended, Paul Dilks. Mr Dilks assured her and her then partner, as he also confirms, that their franchise income (to be derived from an already existing site) would meet their liabilities to both Sell Smart and Bluestone and give them a viable income.

[4] On that assured basis, she contends, she stopped teaching in April 2007; and, because her partner’s tow truck contract had ended in March, the franchise then became their sole source of income. In the event, they derived no income from it. Sell Smart, they say, supplied them with the accounting software package to which they were entitled, but not the training package also essential.

[5] To meet their living expenses Ms George and her partner resorted to the Bluestone loan as to $35,000, and defaulted under their mortgage. In May 2009, in exercise of its power of sale, Bluestone sold their home, leaving a $227,179 shortfall for which it holds them liable.

[6] When they first fell into default in November 2007 and made contact with Bluestone themselves, they discovered that Mr Dilks had obtained their loan from Bluestone by holding out that they intended to renovate their home and that they would meet their mortgage payments out of their incomes as a teacher and tow truck operator. Had he disclosed that they wanted the loan to purchase the franchise on

which they were to be entirely dependent, they contend, Bluestone would not have refinanced them, and they would not have suffered the losses they have.

[7] In August 2014 Ms George and Mr Holland brought this case claiming damages from Sell Smart…

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 George v Dilks

Details

AGLC: George v Dilks [2015] NZHC 3060
Case: [2015] NZHC 3060
Decision Date: 4 December 2015

CaseChat Overview and Summary

Ariana George and Rodney Holland brought an action against Paul Dilks, a mortgage broker, claiming damages for deceit, misrepresentation, negligence, and breach of fiduciary duty. The plaintiffs had purchased a franchise and taken out a loan to do so, relying on assurances from Dilks that the loan was being sought to purchase the franchise and that the income from the franchise would cover their liabilities and expenses. The plaintiffs claim that Dilks misled both them and the lender, Bluestone, into believing that the loan was being sought for home renovations rather than to purchase the franchise. The court found that Dilks did indeed make the misrepresentations on which the plaintiffs relied, and that they were entitled to damages for breach of fiduciary duty. The plaintiffs were awarded damages for the loss of their deposit, loss of equity in their home, and their current debt to Bluestone. The court declined to award damages for loss of income, finding that the plaintiffs had not affirmatively demonstrated such a loss. The plaintiffs were also awarded costs at scale 2B.

Orders