Gibbston Downs Wines Ltd v Perpetual Trust Ltd - [2013] NZCA 506

IN THE COURT OF APPEAL OF NEW ZEALAND

CA367/2012
[2013] NZCA 506

BETWEEN	GIBBSTON DOWNS WINES LIMITED AND RFD FINANCE NO 2 LIMITED Appellants
AND	PERPETUAL TRUST LIMITED First Respondent
AND	JOHN MORRIS LEONARD AND PAUL GRAHAM SARGISON Second Respondents

Hearing:	2 October 2013
Court:	Randerson, Stevens and Venning JJ
Counsel:	A J Forbes QC and K W Clay for Appellants B A Vautier for First Respondent S O McAnally for Second Respondents (abiding the decision of the Court)
Judgment:	22 October 2013 at 3.00 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellants must pay the first respondent costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Stevens J)

Table of Contents

Para No

Introduction  [1]
Further background  [4]
Issues on appeal  [14]
Statutory provisions  [19]
High Court decision  [21]
Issue one: term of the subordination agreement  [27]

Submissions [27]
Our analysis [29]

Issue two: the effect of the assignments [49]

The C+M assignment to Perpetual [52]
The PFF assignment to the appellants [59]

Issue three: What is the appropriate date for determining
the priority of the respective security interests? [66]

Result[71]

Introduction

This is an appeal against a decision of Chisholm J dismissing the appellants’ application for a declaration that their security interest over the collateral of Anthem Holdings Ltd (in receivership) (Anthem) has priority over the security interest of the first respondent, Perpetual Trust Ltd (Perpetual).[1] The second respondents are the receivers of Anthem. They took no part in the appeal and abide the decision of the Court.
[1]Gibbston Downs Wines Ltd v Perpetual Trust Ltd [2012] NZHC 1022, [2012] 2 NZLR 574.
Propertyfinance Securities Ltd (PFS) and Capital + Merchant Finance Ltd (C+M) each loaned money to Anthem pursuant to general security agreements. When C+M insisted on holding a first ranking security interest, the two parties entered into a subordination arrangement. PFS registered a financing change statement under the Personal Property Securities Act 1999 (the Act) confirming the subordination of its security. The subordination details included on the Personal Property Securities Register (the Register) showed an “expiry date” of 31 March 2010.
C+M’s interest in the general security agreement was subsequently assigned to Perpetual. PFS’s security agreement was assigned to Propertyfinance Funding Nominees Ltd and another party (together PFF). Following default on the Perpetual loan, Anthem was placed into receivership on 28 August 2008. After the receivership PFF assigned its interest in the security agreement to the appellants in July 2010. The appellants commenced the current proceedings on 5 August 2010, seeking a declaration that their security interest had priority.

Further background

In March 2005 PFS provided finance to Anthem. The parties entered into a loan agreement and a general security agreement. A financing statement was registered under the Act on 31 March 2005. The expiry date of this registration was 31 March 2010.
In April 2006 C+M provided additional finance to Anthem. A financing statement recording the interest…

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: [2013] NZCA 506
Decision Date: 22 October 2013 at 3.00 pm

CaseChat Overview and Summary

Gibbston Downs Wines Ltd and RFD Finance No 2 Ltd appeal against the decision of Chisholm J that the security interest held by Perpetual Trust Ltd has priority over their security interest. The appeal was dismissed by the Court of Appeal. The Court found that the subordination agreement between Propertyfinance Securities Ltd and Capital + Merchant Finance Ltd, which was assigned to Perpetual and the appellants respectively, remained effective until the C+M loan was repaid or until its security interest was otherwise satisfied. The Court found that both the assignment by C+M to Perpetual and the assignment by Propertyfinance Funding Nominees Ltd to the appellants carried with it the benefit of the subordination agreement. The Court found that the appellants had notice of the subordination agreement. The Court noted that the date on which to determine the priority of the respective security interests is when the interests came into conflict, but found that it was not necessary to decide the issue in the context of this appeal.

Orders