Grey Rose Holding Ltd v Arise Construction Ltd - [2023] NZHC 3431

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-0389

[2023] NZHC 3431

BETWEEN
GREY ROSE HOLDING LTD

Plaintiff

AND

ARISE CONSTRUCTION LTD

First Defendant

TERENCE MICHAEL O’HALLORAN
Second Defendant

JOHN CHARLES DAVIS

Third Defendant

Hearing: On the papers

Counsel:

G Chan for the Plaintiff Second Defendant in person

Judgment:

29 November 2023

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 29 November 2023 at 4 pm.
Pursuant to Rule 11.5 of the High Court Rules.

…………………..
Registrar/Deputy Registrar

Solicitors:
Tompkins Wake, Auckland T M O’Halloran, Remuera

GREY ROSE HOLDING LTD v ARISE CONSTRUCTION LTD [2023] NZHC 3431 [29 November 2023]

Introduction

[1] The second defendant, Terence O’Halloran, is a director of Arise Construction Ltd (Arise). Mr O’Halloran seeks leave to represent Arise in this proceeding. The plaintiff, Grey Rose Holdings Ltd (Grey Rose), opposes a grant of leave.

Background

[2] In its statement of claim dated 22 February 2023, Grey Rose seeks judgment against Arise for an amount allegedly outstanding under two term loan agreements, which were secured by mortgages. The mortgaged properties have been sold and Grey Rose seeks to recover the shortfall, together with interest and costs.

[3] In respect of one loan agreement, Mr O’Halloran is sued as guarantor. In respect of the second loan agreement, Mr O’Halloran and the third defendant, John Davis, are sued as guarantors.

[4] Mr O’Halloran has filed a statement of defence dated 21 June 2023. Mr Davis has filed a statement of defence also dated 21 June 2023, which mirrors the defence of Mr O’Halloran. Messrs O’Halloran and Davis are self-represented.

[5] In their statements of defence, Messrs O’Halloran and Davis admit the existence of the loan agreements and the guarantees, pleading that Arise is not in default. In essence, Messrs O’Halloran and Davis plead that Grey Rose’s director, Tak Yuen Au, agreed with them that they would perform works and services for Grey Rose, and in consideration Arise’s outstanding obligations under the loan agreements would be discharged (the alleged arrangement).

[6] Messrs O’Halloran and Davis rely on the alleged arrangement as discharging Arise’s debt to Grey Rose, and therefore the obligations of Messrs O’Halloran and Davis as guarantors.

Representation for Arise

[7] On 26 April 2023, Johnstone J granted leave to Mr O’Halloran to represent Arise for the limited purpose of confirming that Arise did not oppose an order that

Arise remain on the Register of Companies. Johnstone J left open the possibility of a further application by Mr O’Halloran for leave to represent Arise in this proceeding.

[8] On 1 June 2023, Mander J made a further limited grant of leave to Mr O’Halloran to represent Arise, but only to make submissions regarding extending the period for the filing of Arise’s statement of defence. The date for filing that defence was extended to 21 June 2023. Arise did not comply with that direction.

[9] On 26 October 2023, Mr O’Halloran filed a memorandum renewing his…

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: [2023] NZHC 3431
Decision Date: 29 November 2023

CaseChat Overview and Summary

The case of Grey Rose Holding Ltd v Arise Construction Ltd involved a dispute between the plaintiff, Grey Rose Holding Ltd, and the defendants, Arise Construction Ltd, Terence Michael O’Halloran, and John Charles Davis. Grey Rose sought to recover an amount allegedly outstanding under two term loan agreements, secured by mortgages on properties that had been sold. The defendants admitted to the existence of the loan agreements and guarantees but argued that an alleged arrangement with Grey Rose's director, Tak Yuen Au, discharged Arise’s debt, and thus the obligations of the guarantors.

The primary legal issue the court had to decide was whether Terence O’Halloran, a director of Arise Construction Ltd, should be granted leave to represent the company in the proceedings. The court had to consider the general rule that corporations cannot be represented by non-lawyers in court, except in exceptional circumstances. The court also had to assess whether there were exceptional circumstances warranting an exception to this rule, given Arise's inability to afford legal representation and the alignment of interests between the company and its directors.

The court granted Terence O’Halloran leave to represent Arise Construction Ltd, finding that the interests of the company, Mr. O’Halloran, and Mr. Davis were clearly aligned. The court reasoned that Arise could not afford legal representation, and Mr. O’Halloran, despite not being a practising lawyer, demonstrated an understanding of procedural requirements and was committed to advancing the company's defence. The court concluded that allowing Mr. O’Halloran to represent Arise would not materially prejudice Grey Rose, given that the defence would be identical to that of Messrs O’Halloran and Davis in their personal capacities.

Associate Judge Brittain granted leave to Terence O’Halloran to represent Arise Construction Ltd in the proceeding, pending further order of the Court. The costs in respect of this application were to lie where they fell.

Orders