Gillespie v Guest - [2014] NZHC 2368

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-001629 [2014] NZHC 2368

BETWEEN
BRUCE JAMES GILLESPIE,

PRUDENCE JULIET GILLESPIE, CHRISTOPHER JAMES GILLESPIE, NICHOLAS JOHN GILLESPIE and JONATHAN PAUL GILLESPIE Plaintiffs

AND

ANDREW DEXTER GUEST First Defendant

VIRANDA PROPERTY NETWORK LIMITED

Second Defendant

RSM PRINCE & PARTNERS First Third Party

GRAEME HAMILTON SINCLAIR Second Third Party

Hearing: 18 August 2014

Appearances:

P Cogswell for First Defendant
Second Third Party in Person

Judgment:

26 September 2014

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 26 September 2014 at 4.30 pm
pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date………………………..

GILLESPIE v GUEST & ORS [2014] NZHC 2368 [26 September 2014]

Introduction

[1] Andrew Guest is, among other things, an experienced property consultant. In

2006 one of his clients, the Gillespie Family Trust (GFT), loaned $1.83m to a developer. Graeme Sinclair was involved in the project. He guaranteed the loan, along with the developer’s two directors. The borrower defaulted. The guarantors compromised GFT’s claim under the guarantee for $1.1m, of which Mr Sinclair’s share was $314,000. GFT sued Mr Guest for the shortfall and that claim was also compromised, with Mr Guest paying $300,000. Mr Guest now seeks contribution
from Mr Sinclair.1

[2] The claim for contribution is brought on the alternative bases of Mr Sinclair and Mr Guest being concurrent tortfeasors for the purposes of s 17(1)(c) of the Law Reform Act 1936 or in equity on the basis that the nature and extent of their liability is the same.

[3] Mr Sinclair was unrepresented and did not made legal submissions. However, his position was that he had paid a fair contribution to GFT’s loss and should not be liable to pay more by way of contributing to Mr Sinclair’s settlement sum.

Background

[4] For many years Mr Guest carried on business as a property consultant through his family trust’s interest in a business known as Viranda Property Network Ltd which owns and manages commercial properties. Through Viranda Mr Guest advised and assisted GFT in relation to property investment, though it also invested independently of Viranda without Mr Guest’s input. Bruce and Prudence Gillespie controlled GFT. Mr Guest regarded Mr and Mrs Gillespie as personal friends.

[5] By 2005, following changes in the ownership structure of the Viranda Property Network the business was partly controlled by Mr Guest’s interests and partly controlled by interests associated with John Pendergast and Richard Chisholm,
who also controlled a business known as Titan 1.

1 Mr Guest is precluded from proceeding against the other guarantors by unrelated contractual arrangements.

[6] In 2005 GFT invested in a commercial property development in Christchurch. This investment had been introduced by Messrs Pendergast and Chisholm. It was a joint venture with Titan 1 and it was successful.

[7] In 2006 Titan 1’s financial controller, Peter Thompson, approached Mr Guest to discuss a new project, a residential subdivision in Taupo. The development was being undertaken by a partnership comprising Titan 1,…

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 Gillespie v Guest

Details

AGLC: Gillespie v Guest [2014] NZHC 2368
Case: [2014] NZHC 2368
Decision Date: 26 September 2014

CaseChat Overview and Summary

The High Court of New Zealand considered a claim for contribution between Andrew Guest and Graeme Sinclair, both of whom had been involved in a failed investment in a residential subdivision in Taupo. The Gillespie Family Trust (GFT) had loaned $1.83 million to a developer, with guarantees from Sinclair and two others. When the borrower defaulted, GFT pursued the guarantors, who settled for $1.1 million, with Sinclair's share being $314,000. GFT then sued Guest for the shortfall, which was settled for $300,000. Guest now sought contribution from Sinclair.

The court had to determine whether Sinclair could be liable for contribution under section 17(1)(c) of the Law Reform Act 1936 or in equity. Section 17(1)(c) allows for contribution between tortfeasors, but Sinclair was only liable as a guarantor, not as a tortfeasor. The court also considered whether Sinclair could have been liable in deceit, but found that there were no false representations made by Sinclair or his advisers. In equity, the court found that for contribution to be available, the liabilities must be of the same nature and extent, which was not the case here. Sinclair's primary obligation was for the full amount of the debt, while Guest's liability arose from his failure to adequately assess and advise on the investment and level of risk. The nature and extent of their liabilities were different, and therefore, no contribution was available.

The court dismissed Guest's claim for contribution against Sinclair, and since Sinclair was unrepresented, no question of costs arose.

Orders