Holmes v Senior Trust Capital Limited - [2024] NZCA 369

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA725/2023
[2024] NZCA 369

BETWEEN	CHRISTOPHER ALAN HOLMES First Appellant ANTHONY CHARLES RUSSELL HANNON Second Appellant
AND	SENIOR TRUST CAPITAL LIMITED Respondent

Hearing:	23 July 2024
Court:	Mallon, Lang and Jagose JJ
Counsel:	M D Pascariu and J C Murdoch for Appellants M J Tingey and A Y Pan for Respondent
Judgment:	5 August 2024 at 1 pm

JUDGMENT OF THE COURT

AThe application for leave to file an amended notice of opposition to the application for summary judgment is declined.
BThe appeal is dismissed.
CThe first appellant must reimburse the respondent for its reasonable costs and disbursements on a solicitor and own client basis.

____________________________________________________________________

REASONS OF THE COURT

(Given by Lang J)

This appeal concerns a claim by a financier to recover from the appellants, Mr Holmes and Mr Hannon, the amount said to be owing under a loan facility agreement for which they provided guarantees.
In a judgment delivered on 3 November 2023, Associate Judge Lester entered summary judgment against both appellants.[1] They appealed against the Judge’s decision. However, Mr Pascariu advised us at the commencement of the hearing that Mr Hannon has now entered into a settlement with the financier, Senior Trust Capital Ltd (Senior Trust). Mr Hannon therefore no longer pursues his appeal, and it is accordingly dismissed.

Background

[1]Senior Trust Capital Ltd v Holmes [2023] NZHC 3108 [judgment under appeal].

Senior Trust specialises in the provision of finance for property development projects. It agreed to provide a finance facility in the sum of $3.35 million to a company called Roy’s Bay Estate Ltd (in liq) (Roy’s Bay) in November 2016.[2] Roy’s Bay was undertaking a multi-unit property development on land situated near Wānaka. The project sought to create a luxury lifestyle retirement village in which individual units would be sold to purchasers.
[2]Roy’s Bay’s name was changed from Stoney Creek Terraces Ltd at an early stage. We simply refer to the company as Roy’s Bay.
Mr Holmes was a shareholder and director of Roy’s Bay whilst Mr Hannon indirectly held shares in the company through his family interests.
The interest payable on the loan was to be capitalised and repaid together with the loan principal on a nominated date. Roy’s Bay executed a second ranking mortgage in favour of Senior Trust by way of security for the loan in October 2015. Mr Holmes and Mr Hannon each entered into a Deed of Guarantee under which they guaranteed the company’s obligations under the loan facility agreement.
Roy’s Bay encountered difficulties in completing the development. In May 2018 the loan agreement was varied so as to increase the facility to $8.35 million. Senior Trust extended the date for repayment of the facility on three occasions so that it was ultimately due to be repaid on 30 September 2021. However, Roy’s Bay was unable to repay the facility on that date.
By this stage, Roy’s Bay was endeavouring to sell the land…

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: [2024] NZCA 369
Decision Date: 5 August 2024 at 1 pm

CaseChat Overview and Summary

The appeal concerns a claim by Senior Trust Capital Limited to recover money from Mr Holmes and Mr Hannon, who provided guarantees for a loan facility agreement. The appeal follows a summary judgment entered by Associate Judge Lester in favour of Senior Trust. The court dismissed the appeal and ruled that Mr Holmes must reimburse Senior Trust for its costs. The appeal raised four issues: whether Senior Trust breached its equitable duty to act in good faith when selling the property to Stoney Creek, whether the court needed information about the loan terms to Senior Trust's subsidiary, whether Senior Trust proved the quantum of its claim, and whether Mr Holmes should be permitted to amend his opposition to include a ground based on oppression. The court found that Senior Trust did not breach its equitable duty as it did not know about the earlier contract with S5. The court also found that knowing the loan terms was unnecessary for the judgment, and that Mr Holmes failed to prove the quantum issue in the High Court. Finally, the court declined Mr Holmes' request to amend his opposition to include an oppression argument.

Orders