Hall v Robinson HC Christchurch CIV 2010-409-1378

[2010] NZHC 2250

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2010-409-001378

BETWEEN  TERENCE HALL Plaintiff

ANDPERCY RODERICK ROBINSON First Defendant

ANDMARIE THERESE JOHNSEN Second Defendant

Hearing:         7 December 2010

Appearances: K T Dalziel for Plaintiff

C B Persson for Second Defendant

Judgment:      14 December 2010

RESERVE JUDGMENT OF ASSOCIATE JUDGE DOHERTY

on Summary Judgment Application against Second Defendant

Introduction

[1]      Judgment was entered against the first defendant on 2 August 2010 pursuant to an undefended application for summary judgment.   The plaintiff now proceeds against the second defendant.

The facts

[2]      Both defendants operated a company, Southern Link Coaches Limited (“the company”), and were both directors and shareholders of it.

HALL V ROBINSON AND ANOR HC CHCH CIV-2010-409-001378  14 December 2010

[3]      The plaintiff and the first defendant were acquainted, as the first defendant was a friend of the plaintiff’s father.

[4]      The plaintiff claims that between 17 August 2006 and 29 November 2007 a number of advances were made by him to the first and second defendants at their

request, as follows:

Date of advance	Amount
17 August 2006	$52,000
15 September 2006	$75,000
27 October 2006	$10,000
8 November 2006	$75,000
28 November 2006	$7000
31 May 2007	$95,000
3 October 2007	$35,000
20 November 2007	$3000
27 November 2007	$7000

[5]      Interest  was  payable  on  the  advances  at  varying  rates,  some  of  which mirrored those of borrowings that the plaintiff himself had made and on-lent.

[6]      The second defendant opposes judgment upon the grounds that she did not borrow any monies from the plaintiff, nor was she a party to any arrangement whereby monies were lent to the first defendant or the company.

[7]      A summary of her evidence in support of her opposition is:

i)        She was never a party to any negotiation or agreement.

ii)She never signed any documentation in relation to any lending by the plaintiff.

iii)She  did  not  receive  any  money  from  the  plaintiff  in  any manner whatsoever.

iv)She was aware of monies from the plaintiff being paid into the bank accounts of the company.

[8]      The first defendant corroborates the second  defendant’s denials and says further:

i)It was he who approached the plaintiff to borrow money to invest in and support the company.

ii)       All requests to borrow money were made by him.

iii)He conducted all negotiations in relation to the borrowing and the second defendant was never present, nor a party to them.

iv)All  instructions  given  to  the  plaintiff  about  the  details  of payments were given by the first defendant.

v)The  advance  of  17  August  2006  was  acknowledged  by an acknowledgement of debt signed by him alone.

vi)That advance was by a bank cheque with the first defendant as payee (the money was ultimately transferred by him into the company’s account).

vii)With  all  of  the  subsequent  loans,  the  principal  was  paid directly into the company’s bank account either by the plaintiff or   by   financial   institutions   acting   on   the   plaintiff’s instructions.

viii)The plaintiff was au fait with the business of the company and came two or three times a week to the company’s offices and reviewed business records.

ix)      A $1000 principal repayment made on 31 February 2007 and all payments of interest on the loans were made by the company.

[9]      The documentary evidence presented by the plaintiff is in itself corroborative of the evidence of both first and second defendant.  Whilst the plaintiff deposes that the advances were made to both of the defendants, the documentary evidence produced shows:

i)An  acknowledgement  of  debt  from  the  first  defendant  in favour of the plaintiff in the sum of $52,000 (dated 17 August

2006).

ii)A bank cheque receipt dated 17 August 2006 showing the first defendant as the payee of the $52,000 advance.

iii)      A bank cheque receipt dated 15 September 2006 for the sum of

$75,000 to payee Southern Link Coaches Ltd.

iv)Receipts of deposits of $10,000 (27 October 2006) and $7000 (28 November 2006) to account 010822-0075247-000.

v)Documentation   from   a   commercial   lender   (Finance   and Leasing Limited) relating to advances of borrowings from the “T M Hall Facility” to the company’s account number 01 0822

0075247 00 recording advances on 7 November 2006 ($5000)

and 8 November 2006 ($62,651.23).

vi)Finance and Leasing’s ledger documentation showing arrears of interest repayments missed by “Southern Link Coaches” and “Christchurch Engine” due 8 November 2006.

vii)University of Canterbury Visa statement in the name “Mr T M Hall” showing advances on 20 November 2007 ($3000) and 29

November  2007  ($7000)  paid  to  “Southern  Link  Coaches

Sydenham Chri NZ”.

viii)Copies of EFTPOS terminal printouts of the above advances, one of which is signed by the plaintiff which are accompanied by a note purported to be signed “Rod Robinson, Southern Link Coaches”.

[10]     In short, there is nothing in any of the documentation produced which shows any link at all between the plaintiff and the second defendant, bar one document which is alleged to have been signed by the second defendant two years after the date of the first advance and nine months after the last.

[11]     The first and second defendants confirm that on 13 August 2008 they signed a document labelled “ACKNOWLEDGEMENT OF DEBT” which contained the following:

We, Percy Roderick Robinson and Marie Therese Johnsen, hereby confirm and acknowledge that we are personally indebted to Terence Hall in the sum of $358,000 as at the date of this document.

[12]    The amount of “$358,000” was hand-written and endorsed by an initial resembling the signature of the first defendant that appears on the document.

[13]     The plaintiff says that this was an acknowledgement of the true position and the document signed by the defendants is an estoppel by representation.

[14]     The second defendant deposes that she did sign the acknowledgement, but in circumstances where it did not represent the truth.  She said it was presented to her by the first defendant and that she was convinced by him that if they signed it, a third party would consider purchasing a half-share of the company.   At this stage the company was in dire financial straits and the parties (including the plaintiff) saw the third party as a saviour.  The first defendant told the second defendant that the third party would not be interested if the loans made by the plaintiff were not “taken off the   books   of   the   company”.      The   first   defendant   persuaded   her   that   an

acknowledgement of debt was the simplest and easiest way of achieving that.  The second defendant said she felt under pressure and compelled to sign.

[15]     This is corroborated by the first defendant, who described the company being on the verge of financial collapse and that both he and the company were under a huge amount of pressure at the time.  He thought the introduction of the third party would save the company.  The first defendant says that the plaintiff was aware of this position and was compliant with his methodology to distance the company from the loan advances.

[16]     In any event, he deposes that he placed the second defendant under a great deal of pressure to sign the acknowledgement of debt.  He goes so far as to say that he induced her “to sign the document on the basis that it was the only way to save the company”.  He confirmed also that the second defendant had no knowledge of another  document  signed  by the  plaintiff  the  same  day which  purports  to  be  a confirmation by the plaintiff that the monies were owed by the defendants and not the company.

Principles

[17]     The principles to be applied in a summary judgment application are trite, and there is no argument between the parties as to the principles (recently summarised in Krukziener v Hanover Finance Ltd (2008) 19 PRNZ 162 (CA) at 169).  One of those principles  elevated  by the  plaintiff  is  that  the  Court  take  a  robust  and  realistic approach where the facts warrant it and that I not uncritically accept evidence that is inherently lacking in credibility; for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable.

[18]     In short, the plaintiff relies upon:

i)the fact that the denials by either of the defendants are not corroborated by documentary evidence produced by them; and

ii)       the signing of the acknowledgement of debt of 13 August 2007

estops the second defendant from denying liability.

Discussion

[19]     The criticism of a lack of corroborating documentary evidence produced by the second defendant is unfounded.  To the contrary, the evidence produced by the plaintiff is corroborative of that of the second defendant, namely that there was never any connection between the plaintiff and the second defendant, but rather any connection was between the plaintiff and either the first defendant or the company.

[20]     The plaintiff relies on s 26(1) Limitation Act 1950 to prove that the document of 13 August 2007 is at law an acknowledgement of debt.  But s 26(1) does not mean that the deed of acknowledgement itself gives the plaintiff a cause of action.

[21]     A similar issue was discussed by Rodney Hansen J in Qiao v Zhou HC Auckland CIV-2005-404-007123, 2 August 2006.  Rodney Hansen J referred to the effect of an acknowledgement of debt as extending the period of limitation and conferring a right to recover the claim or debt to which it relates.  Qiao confirms that the acknowledgement itself does not create a cause of action when none previously existed.  In circumstances not unlike those present in this case, the Court said at [24]:

The difficulty for the appellant is that no prior right to recover the money is alleged or established. He does not claim that the respondent previously agreed to repay the sum or that a right to recover arose on any basis independently of the document itself. But as an acknowledgement of debt which does not rely on a pre-existing right, it does not found a cause of action.

[22]     Although the plaintiff claims the second defendant was a recipient of the loans, he has produced no corroborative evidence that fact other than the acknowledgement.  Like the situation in Qiao, the acknowledgement of debt in this case   lacks   the   essential   element   of   consideration   for   it   to   be   a   contract. Consideration might be forbearance to look to the company for repayment, but the plaintiff’s position has always been that the advance was made to the first and second defendants.  The document signed by the plaintiff contemporaneously with the acknowledgement is at best a statement of his views at the time.

[23]     As counsel for the first defendant puts it, estoppel by misrepresentation must be viewed “in the total context of the execution of the acknowledgement by the first defendant”.  In that context, this situation is distinguishable from that relied upon by the plaintiff in Strategic Finance Ltd v Henderson HC Christchurch CIV-2009-409-

001731, 16 August 2010, French J, where an acknowledgement was entered into by a sophisticated commercial businessman advised by solicitors.

[24]     The plaintiff also points out that until proceedings there has been no denial by the second defendant or her solicitors in exchanges of pre-issue correspondence.  It would be dangerous to draw the inference which counsel for the plaintiff asks me to. In the first place, the personal correspondence introduced in evidence is all from the first defendant; there is none from the second defendant.  In the second place, there is no evidence the first defendant was authorised to bind the second defendant.  The correspondence does no more than raise suspicions.

Outcome

[25]     I am not satisfied that the plaintiff has shown the second defendant does not have an arguable defence.   First, because there are competing assertions on the evidence  where  findings  of  fact  cannot  be  made  without  cross-examination. Secondly, I cannot be satisfied that the acknowledgement of debt dated 13 August

2007 truly reflects the position between the plaintiff and the second defendant so as to constitute an estoppel which would prevent the second defendant’s denial.

[26]     The application for summary judgment is dismissed.

[27]     In accordance with the approach in NZI Bank Ltd v Philpott [1990] 2 NZLR

403 (CA) I reserve the costs of the application.

[28]     In respect of the substantive proceeding, the following directions are made:

i)The  second  defendant  is  to  file  and  serve  a  statement  of defence by 28 January 2011.

ii)Both parties to file and serve list of documents verified by affidavit and complete inspection of such documents by 18

February 2011.

iii)Any  interlocutory  application  is  to  be  filed  and  served (together  with  supporting  affidavits)  by  4  March  2011. Failing any application by that date, the Registrar shall allocate a second case management conference at the first available

date.

ASSOCIATE JUDGE DOHERTY