Gilmore v Gilmore

[2022] NZHC 1806

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2021-409-418

[2022] NZHC 1806

IN THE MATTER

of a breach of a Loan Agreement

BETWEEN

GARRY KEITH GILMORE AND KAY DIANNE GILMORE

Plaintiffs

AND

AARON WAYNE GILMORE AND COW POWER INVESTMENTS LIMITED, as

trustees of THE MIGHTY ROCKET TRUST

Defendants

Hearing:

(On the papers)

Appearances:

S C Clay for Plaintiffs

A W Gilmore for Defendants

Judgment:

26 July 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Costs)

GILMORE v GILMORE [2022] NZHC 1806 [26 July 2022]

[1]    In this proceeding, the plaintiffs seek judgment for advances made to the defendants with their claim commenced by way of an application for summary judgment. The first call of the application for summary judgment was delayed through the plaintiffs applying for, and being granted, orders for substituted service. The effect of that step on the progress of the proceeding was that the application first came before the Court on 24 February 2022.

[2]    Discussions on 24 February 2022 resulted in a Consent Judgment being issued by me on 24 February 2022,1 and varied by my Judgment of 13 April 2022.2

[3]    While  the  defendants  did   not   file   a   formal   notice   of   opposition,   Mr Aaron Gilmore filed a memorandum dated 9 November 2021 setting out the defences asserted for the defendants.

[4]    The defendants did not dispute they had received the advance in issue but asserted time for repayment had not arrived.

[5]    Given the family context to this proceeding and that the issue appeared to be one of timing more than anything else, discussions took place at the first call resulting in my Consent judgment. Judgment was entered against the defendants in the sum of

$257,000 plus interest at the contractual rate, but with that judgment to lie in Court for 120 calendar days from 24 February 2022. Orders for security were made with costs reserved.

[6]Costs submissions were filed as directed.

Plaintiffs’ submissions in support of costs

[7]    The plaintiffs claim that the summary judgment application was founded on what  is  referred  to  in  the  pleadings  as  the  “Second  Loan  Agreement”  dated    7 February 2019. Under that Second Loan Agreement, the loan was to be repaid following the issuing of code compliance of certain properties:

1      Gilmore v Gilmore [2022] NZHC 274.

2      Gilmore v Gilmore [2022] NZHC 793.

… or an annual lump sum repayment amounts of $100,000 per annum on the annual anniversary of this Loan until repaid, whichever comes first.

[8]    The plaintiffs’ case was that payments of $100,000 accrued on 7 February 2020 and 7 February 2021 together with interest.

[9]    The plaintiffs say they demanded the sum due and when demand was not met they filed these proceedings which resulted in a judgment.

[10]   Accordingly, the plaintiffs say they were successful in the proceeding and seek costs on a 2B basis plus disbursements.

Defendants’ response

[11]   Costs are opposed on the basis that the proceedings were unnecessary. The defendants did not deny liability but disputed when repayment was due.

[12]   The defendants assert that the Second Loan Agreement was altered by the plaintiffs. I do not consider the asserted alteration to be of any moment.

[13]   Because of the way this matter has progressed, the plaintiffs have not responded to the claims set out in the defendants’ memorandum of 9 November 2021. I am mindful that the document is a memorandum and not an affidavit. However, in that document Mr Aaron Gilmore says that the plaintiffs agreed to a further alteration of  the  Second  Loan  Agreement  (a  third  change)  via  exchange  of  emails  on  24 March 2020, effectively putting in place a further deferral of repayment.

[14]   In that email of 23 March 2020, which is annexed to the memorandum,      Mr Aaron Gilmore sets out the difficulties he had encountered with the completion of code compliance for the Wellington properties and the impact of COVID-19. He said:

The existing loan agreement we have had me paying effectively 5% or $2k   a month and $100k in annual lump sums till it is paid off. As we have agreed this far it is $24k accrued and $430k balance. Once we get back to some form of normalcy we can repay/restructure it as required. The best thing we can do is to wait and see how this plays out. Meanwhile balances will of course accrue.

[15]The response from Mr Garry Gilmore, one of the plaintiffs, was:

Thanks for letting us know we are aware of this and understand your situation who would. have foreseen this. Anyhow main thing is that we keep positive and keep safe and get back to normal Asap best wishes meanwhile …

[16]   The thrust of the defendants’ position is this email records an agreement that payments would be deferred but with the due amounts accruing, including interest. Thus, the defendants say the proceeding was premature.

[17]   The plaintiffs meet this by saying there have been various promises of payment from the defendants. The plaintiffs refer to a series of text messages. However, in relation to those texts that post-date the 24 March 2020 email exchange, the promises of payment by the defendants are, in general terms, consistent with the 24 March 2020 email exchange.

Legal principles and discussion

[18]   The general rule in the costs context is that costs follow the event. Under r 14.8 of the High Court Rules 2016, costs on interlocutory applications must be fixed when the application is determined and become payable when they are fixed unless there are special reasons to the contrary. In this context, what we are referring to is costs on the interlocutory application. The proceeding, seeking judgment for the balance of the advance which has not yet fallen due, remains alive.

[19]   McGechan on Procedure at HR14.8.02 under the heading “Determination” says:3

An interlocutory application may be “determined” either by decision of the Court or by another mechanism such as agreement of the parties or withdrawn by leave: Ip v Ip [2016] NZHC 528 at [12]; Winton v Winton [2018] NZHC 486 at [16]-[17].

[20]   In  respect   of   a   successful   summary   judgment   application,   that   is,   a “determination” resulting in an order in favour of the plaintiff, costs are usually awarded at the time of the judgment.

3      Robert Osborne (ed) McGechan on Procedure (online ed, Thomson Reuters) at [HR148.02].

[21]   Ultimately, I have reached the view that the plaintiffs are entitled to costs in respect of their summary judgment application only. I say that as the balance of the proceeding  remains  to  be  determined.   While  I  accept  the  defendants  adopted  a constructive approach to resolution, at the end of the day the plaintiffs obtained judgment.  The  judgment   which   was   to   lie   in   Court   for   120   days   from 24 February 2022, is now able to be sealed as payment has not been made. There is something in what Mr Clay, counsel for the plaintiffs, says that it appears the proceeding was necessary to bring the matter to a head.

[22]   Accordingly, the plaintiffs are entitled to costs for the steps they have taken to date, save for the filing of the statement of claim. As I have said, the balance of the plaintiffs’ claim remains to be determined and to award costs now for that step would be to award costs for the entirety of that step when the remainder of the proceeding remains to be determined. Costs for the filing of the statement of claim are reserved.

[23]   Accordingly, the claim for commencement is, at this stage, disallowed and costs on that step are reserved.  However,  I  allow  the  plaintiffs  to  claim  costs and disbursements in relation to the substituted service steps.

[24]   Mr Clay   is   to   prepare    an    amended    costs    schedule    accordingly.  If Mr Aaron Gilmore takes any issue with the calculation, I will determine the amount for which costs can be sealed at that time.

Associate Judge Lester

Solicitors:
Lane Neave, Christchurch

Copy to:

Mr A W Gilmore (self-represented Defendant)