Heartland Bank Limited v Domecq
[2019] NZHC 1504
•28 June 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-001812
[2019] NZHC 1504
BETWEEN HEARTLAND BANK LIMITED
Plaintiff
AND
CHRISTINA FLORENCE DOMECQ
Defendant
Hearing: On the papers Counsel:
I J Thain for Plaintiff
No appearance for Defendant
Judgment:
28 June 2019
SUPPLEMENTARY JUDGMENT OF ASSOCIATE JUDGE P J ANDREW [ON INTEREST AND COSTS]
HEARTLAND BANK LTD v DOMECQ [2019] NZHC 1504 [28 June 2019]
Introduction
[1] On 7 June 2019, I granted summary judgment against the defendant, Ms Christina Domecq, in the sum of $12,814,367.23. I also awarded interest on the judgment sum and costs (both contractual interest and interest pursuant to s 9 of the Interest Money Claims Act 2016).
[2] In response to my minute of 7 June 2019, the plaintiff has filed a memorandum dated 21 June 2019 addressing the issue of the calculation of interest on the judgment and the contractual rates and the plaintiff’s claim for costs.
[3]This judgment addresses those two outstanding issues.
Contractual interest calculation
[4]The judgment is comprised of the following amounts, as at 15 August 2018;
(a)$3,012,358.54 in relation to the principal and interest due under the Foundry Innovations Limited (Foundry) Term Loan Facility Agreement (Foundry Loan);
(b)$83,664.85 in relation to the principal and interest due under the Foundry Overdraft Account (Foundry Overdraft);
(c)$5,293,156.30 in relation to principal and interest due under the Ora HQ Limited (Ora HQ) Term Loan Facility Agreement (Ora HQ Loan);
(d)$1,895,894.71 in relation to principal and interest due under the Fulcrum Limited (Fulcrum) Term Loan Facility Agreement (Fulcrum Loan);
(e)$116,000.24 in relation to principal and interest due under the Fulcrum Overdraft Account (Fulcrum Overdraft);
(f)$2,649,845.35, less the part-payment of $404,157.12 received on 11 October 2018, in relation to principal and interest under the Wild Logic Limited Term Loan Facility Agreement (Wild Logic Loan);
(g)$167,604.36 in expenses incurred by Heartland as a result of the failure by Foundry, Ora HQ, Fulcrum and Wild Logic to repay Heartland (Indemnity Costs).
[5] Interest on the judgment accrues daily and the following contractual default interest rates apply:
(a)18.75 per cent per annum for the:
(i)Foundry Loan;1
(ii)Ora HQ Loan.2
(b)18 per cent per annum for the:
(i)Fulcrum Loan;3
(ii)Wild Logic Loan;4 and
(iii)expenses incurred in relation to the failure of Fulcrum, Foundry,
Ora HQ and Wild Logic to repay Heartland.5
(c)26.70 per cent per annum for the Foundry Overdraft;6 and
(d)21.20 per cent per annum for the Fulcrum Overdraft.7
1 Pursuant to Section 2: Specific Terms (Term loan), Interest and Fees, ‘Interest Rate’ and ‘Default Rate’ rows and clause 3.4 of the Foundry Term Loan Facility Agreement at exhibit HB11 of Mr Donnelly’s affidavit, dated 22 August 2018.
2 Pursuant to Section 2: Specific Terms (Term loan), Interest and Fees, ‘Interest Rate’ and ‘Default Rate’ rows and clause 3.4 of the Ora HQ Term Loan Facility Agreement at exhibit HB12 of Mr Donnelly’s affidavit, dated 22 August 2018.
3 Pursuant to Section 2: Specific Terms (Term loan), Interest and Fees, ‘Interest Rate’ and ‘Default Rate’ rows and clause 3.4 of the Fulcrum Term Loan Facility Agreement at exhibit HB13 of Mr Donnelly’s affidavit, dated 22 August 2018.
4 Pursuant to Section 2: Specific Terms (Term loan), Interest and Fees, ‘Interest Rate’ and ‘Default Rate’ rows and clause 3.4 of the Wild Logic Term Loan Facility Agreement at exhibit HB14 of Mr Donnelly’s affidavit, dated 22 August 2018.
5 Pursuant to clauses 9 and 3.4 of the relevant Term Loan Facility Agreements and being the lower of the two contractual interest rates that would apply, given that the costs included in this calculation were calculated as a total amount in relation to all of Foundry, Ora HQ, Fulcrum and Wild Logic.
6 As set out in paragraph 20 of the affidavit of Mr Donnelly, dated 22 August, the relevant default interest rate for unarranged overdrafts on transactional accounts was available on Heartland’s website. See ‘Interest Rates’
7 Although the statement of claim refers to the default interest rate available on Heartland’s website, Heartland confirms that the default interest rate that was in fact applied to this account was the lower rate of 21.20%.
[6] The plaintiff advises that in calculating the interest movements through the accounts have been reflected so that interest is only calculated on the amount owed on each day at the time.
[7] In total the plaintiff claims contractual interest of $1,806,665.72. The calculation is set out in Schedule A to the plaintiff’s memorandum of 21 June 2019.
[8] I am satisfied, on the basis of the material provided by the plaintiff, that it should be awarded contractual interest as claimed, in the sum of $1,806,665.72. The defendant, in providing the various guarantees, signed up to and agreed to all of the relevant terms, including the default interest rates. I have, of course, rejected the defence for which she contended, namely oppression under the Credit Contracts and Consumer Finance Act 2003. The companies and the defendant are in default and the plaintiff is entitled, as the contracts provided, to the default rate contended for.
Costs
[9] Pursuant to clauses 3.1 and 12 of the Guarantee and Indemnity Deeds between Heartland and Ms Domecq in relation to the guaranteed indebtedness of Foundry, Ora HQ, Fulcrum and Wild Logic, Ms Domecq has indemnified Heartland for:
(a)all expenses and liabilities incurred as a result of the guaranteed indebtedness of Foundry, Ora HQ, Fulcrum and Wild Logic not being paid out; and
(b)each expense sustained or incurred by Heartland as a result of the exercise of, or in protecting or enforcing, or otherwise in connection with, the rights of Heartland under the various Guarantee and Indemnity Deeds.
[10] In relation to all of its legal costs incurred since 15 August 2018 (as a result of the guaranteed indebtedness of Foundry, Ora HQ, Fulcrum and Wild Logic not being paid and of the exercise of enforcing its rights under the various Guarantee and Indemnity Deeds), the plaintiff claims costs of $65,417.68 including disbursements and GST.
[11] The plaintiff also claims $115,000 in further costs incurred by the receivers of Fulcrum.8
[12] In support of its claim for costs, including those of the receivers, the plaintiff has attached to its memorandum fully itemised invoices including relevant hourly rates and hours incurred.
[13] The total sum sought of $180,417.68 is a large sum. However, I am satisfied, on the basis of the documentation provided, that the plaintiff should be awarded costs in the amount sought. The amounts at issue are substantial and the plaintiff was, in the circumstances, justified in expending considerable resources in order to try and recoup recovery of the outstanding debts.
Result
[14]I order:
(a)The defendant, Ms Christina Domecq, is to pay contractual interest to the plaintiff (as provided for in my minute of 7 June 2019), for the period 15 August 2018 until 7 June 2019 in the total sum of
$1,806,665.72;
(b)The defendant, Ms Christina Domecq, is to pay costs to the plaintiff (including GST and disbursements) in the total sum of $180,417.68 for the period 15 August 2018 to 7 June 2019 (i.e. the date of the judgment).
[15] I note that interest on any unpaid judgment continues to run from 7 June 2019 pursuant to the Interest on Money Claims Act 2016 (as provided for in my minute of 7 June 2019).
Associate Judge P J Andrew
8 Of the $200,000 advance to the receivers of Fulcrum, $85,000 as has been accounted for as at 15 August 2018 in the judgment.
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