Kang v Geneva Capital Limited
[2025] NZHC 414
•6 March 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-002533 [2025] NZHC 414
BETWEEN WETEX KANG
Appellant
AND
GENEVA CAPITAL LIMITED
Respondent
Hearing: 5 March 2025 Appearances:
Appellant in person
E K Widjaya for Respondent
Judgment:
6 March 2025
JUDGMENT OF VENNING J
This judgment was delivered by me on 6 March 2025 at 2.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: McVeagh Fleming, Auckland Copy to: Appellant
KANG v GENEVA CAPITAL LTD [2025] NZHC 414 [6 March 2025]
[1] In a judgment delivered on 26 August 2024, Judge N R Dawson entered summary judgment in favour of Geneva Capital Limited (Geneva) against Wetex Kang (Mr Kang) in the sum of $199,575.68.1 Mr Kang appeals against the entry of summary judgment.
Background
[2] On 25 September 2020, Geneva and Manuka Honey Index Limited (MHI) entered a lending facility agreement (facility) pursuant to which MHI agreed to borrow moneys from Geneva. Mr Kang guaranteed MHI’s obligations under the facility. He was a director and shareholder of MHI.
[3] Between 1 October 2020 and 23 June 2021, Geneva advanced $794,000 to MHI pursuant to the facility. In February 2023, Geneva made demand on MHI for payment of $10,000 per month to reduce the outstanding debt owing under the facility. MHI failed to meet the demand which constituted a default under the facility. By letter dated 6 November 2023 Geneva gave notice cancelling the facility. By the same letter Geneva made demand of both MHI and Mr Kang for immediate payment of the amount outstanding under the facility.
[4] Geneva then issued proceedings in December 2023. It claimed judgment in the sum of $213,406.71 together with interest and costs. When the matter came before the District Court on 19 April 2024 the parties agreed that, of the total principal advanced by Geneva to MHI of $794,000 at least $777,028.86 had been repaid. However, Geneva pursued its claim for administration fees, and for interest and costs. At the time Mr Kang also took the point that he had made further personal payments.2
[5] By the time the claim came for hearing on a defended basis before Judge Dawson in August, Geneva had quantified its claim at $199,575.86.
1 Geneva Capital Ltd v Manuka Honey Index Ltd [2024] NZDC 19576.
2 By the date of the substantive hearing Mr Kang accepted there had not been any further payments.
District Court Judgment
[6] In entering summary judgment for Geneva against Mr Kang, Judge Dawson accepted that Geneva was entitled to claim administration fees, interest and costs of at least $199,575.68 pursuant to the loan facility. He noted Geneva had significantly reduced the amount of interest it could have claimed under the facility.
[7] Mr Kang had raised two defences to the summary judgment application: undue influence and his mental health at the time the facility agreement and guarantee was concluded.
[8] While Mr Kang had raised a defence of undue influence his submissions were primarily based on the provisions of the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and the associated Responsible Lending Code (the Code). The Judge concluded the lending facility was clearly for business purposes and did not come within the auspices of the CCCFA. In any event the Code that Mr Kang relied on was not binding. The Judge held there was no evidence that Geneva had exercised any undue influence over MHI or Mr Kang to induce them to enter the facility. The later difficulties of the defendants did not constitute undue influence.
[9] As to the second ground of defence, the Judge noted the only evidence advanced by Mr Kang that he was of unsound mind was a statement in his affidavit that:
I also believe that I was not of a sound mind when I signed the agreement.
[10] The Judge noted there was no independent evidence from any third person and particularly, no psychological or psychiatric evidence to support the submission. The Judge concluded there was a strong inference that the present state of Mr Kang’s financial affairs had led him to make the submission and he rejected it.
[11]The Judge accordingly entered summary judgment for Geneva.
Stay
[12] After this appeal was filed, Robinson J made an order staying execution on the judgment at a case management conference.
Appeal grounds
[13]In his notice of appeal Mr Kang raised the following grounds:
(a)the decision failed to consider whether the CCCFA applied to Mr Kang’s personal guarantee;
(b)the Judge had failed to consider the validity of Mr Kang’s personal guarantee;
(c)the Judge erred in issuing summary judgment as Mr Kang had a strong defence;
(d)the Judge erred in his decision the facility was not signed under undue influence;
(e)the Judge failed to consider whether a guarantee and mortgage given for 1201 Okau Road, Ahititi was provided under duress; and
(f)the Judge failed to consider whether the sale proceeds from the sale of 1201 Okau Road, Ahititi were taken by Geneva unlawfully.
[14] In his written submissions in support of the appeal Mr Kang addressed the above and also submitted that Judge Dawson was wrong to refuse to grant an adjournment of the preliminary hearing in April.
Principles
[15]The principles to apply on a summary judgment application are well settled.
In Krukziener v Hanover Finance Ltd the Court confirmed:3
[26] The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
[27] Under r 141A the defendant need not file a statement of defence. The onus remains on the plaintiff, and summary judgment will be denied if on the hearing of the application it appears that there is an issue worthy of trial.
[16]I turn to deal with the issues raised by Mr Kang.
The CCCFA argument
[17] Mr Kang accepted that the CCCFA applies primarily to consumer credit contracts and provides extensive protections for consumers, but noted that s 13 establishes a presumption that the credit contract is a consumer credit contract unless the contrary is established. Mr Kang initially submitted in his written material that lenders such as Geneva engaged in both consumer and commercial lending and were subject to the CCCFA and Code thus ensuring compliance with responsible lending principles and disclosure requirements even if the loan was otherwise primarily commercial in nature. However, during submissions he accepted that the CCCFA did not apply to the lending arrangement between Geneva and MHI. Nevertheless, he made the point there was nothing in the personal guarantee he had signed that stipulated the guarantee was not within the scope of the CCCFA. The CCCFA, along with the Code, encouraged lenders to assess affordability and suitability in both
3 Krukziener v Hanover Finance Ltd [2008] NZCA 187.
personal and commercial lending. Geneva had failed to assess affordability from Mr Kang’s perspective when the personal guarantee was signed. The Judge failed to sufficiently address these points.
[18] The short point in answer to Mr Kang’s submission is that the CCCFA did not apply to the facility agreement between Geneva and MHI, (as he ultimately conceded) nor to Mr Kang’s guarantee of the lending under the facility. The CCCFA, and the Code do not apply to Mr Kang’s personal guarantee. Section 9B of the CCCFA confirms that a relevant guarantee for the purposes of the Act is a guarantee given by a natural person in respect of a consumer credit contract. As this Court said in BMW Financial Services New Zealand Ltd v Cotton:4
[15] The only issue of any potential legal interest is whether or not in fact there were any responsible lender obligations under the Credit Contracts and Consumer Finance Act 2003 (CCCFA) in any event, given the nature of the transaction as a business to business loan. Mr Langdana submitted the answer to that lies in the definition sections in the CCCFA itself. First, relevant guarantee: a relevant guarantee for the purposes of the CCCFA is:
“a guarantee given, … by a natural person in respect of a consumer credit contract, … .”
[16] Consumer credit contract is itself defined in s 11 as a contract where the debtor is a natural person, so that a relevant guarantee is a guarantee given by a natural person in respect of borrowing by another natural person. It does not apply to the circumstances of a business to business loan or credit contract guaranteed by another person, even if that other person is a natural person. The Act has no application to the borrowing in this case.
[19] Similarly, in the present case the loan facility was a business to business loan. Neither the Code nor the CCCFA applied to Mr Kang’s personal guarantee. Further, and in any event, as the Judge correctly observed, s 9E of the CCCFA expressly provides that the purpose of the Code is to offer guidance. Mr Kang’s reference to s 9E(3) does not assist him. It simply confirms that if a lender complies with the Code, that is evidence the Court can take into account. It says nothing about whether the lender is obliged or required to comply with it.
4 BMW Financial Services New Zealand Ltd v Cotton [2021] NZHC 854.
Validity of personal guarantee
[20] Mr Kang next submitted that the Judge had failed to consider the authorities he had referred to, namely Barclays Bank plc v O’Brien; Royal Bank of Scotland v Etridge (No 2); and Commercial Bank of Australia Limited v Amadio,5 which he had cited to support his submission that by reference to cl 3.1(i) of the loan agreement he had not received legal advice prior to signing the personal guarantee so that his guarantee was invalid.
[21] With respect to Mr Kang’s reliance on the above authorities, they deal with quite different issues to those in the present case. Barclays Bank for example, identified two types of undue influence, actual and presumed. Where actual undue influence is alleged, as in the present case, the onus is on the person claiming under influence to prove it affirmatively. Ultimately it is a question of evidence. Mr Kang’s evidence in the present case was insufficient.
[22]The clause that Mr Kang relies on, cl 3.1(i) of the loan agreement, provided:
3CONDITIONS PRECEDENT
3.1To the Facility: The Facility shall not be available unless and until the Lender has received (in form and substance satisfactory to it) the following:
…
(i)Guarantor: confirmation either that the Guarantor has obtained independent legal advice as to the obligations/responsibilities created by their entering into this Agreement and the Lender being furnished with a certificate from the advising solicitor confirming that the advice has been provided or that the Guarantor's right to obtain such advice has been waived to the satisfaction of the Lender;
[23] Clause 3.1(i), like the other clauses in cl 3.1, was a condition precedent to Geneva making the loan advance. The condition was inserted for the benefit of Geneva, not Mr Kang, and could be waived by it.
[24]Further, and in any event, cl 8.3 of the facility agreement provided:
5 Barclays Bank plc v O’Brien [1994] 1 AC 180; Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44; and Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447.
8.3As a separate and continuing undertaking, the Guarantor unconditionally and irrevocably undertakes to the Lender that, should the Guaranteed Indebtedness not be recoverable from the Guarantor under this Agreement or another Relevant Document for any reason, including a provision of this Agreement or another Relevant Document or an obligation (or purported obligation) of the Borrower to pay Guaranteed Indebtedness or to perform or comply with a Guaranteed Obligation being or becoming void, voidable, unenforceable or otherwise invalid, whether or not that reason is or was known to the Lender and whether or not that reason is:
(a)a defect in or lack of powers of a Relevant Party or the irregular exercise of those powers; or
(b)a defect in or lack of authority by a person purporting to act on behalf of a Relevant Party; or
(c)a legal or other limitation (whether under the Limitation Act 2010 or otherwise), disability or incapacity of a Relevant Party; or
(d)a dissolution, amalgamation, change in status, constitution or control, reconstruction or reorganisation of a Relevant Party (or the commencement of steps to effect the same),
the Guarantor will, as an independent obligation, pay to the Lender on demand the amount which the Lender would otherwise have been able to recover (on a full Indemnity basis). In this clause, the expressions ''Guaranteed Indebtedness" and "Guaranteed Obligations'' include any indebtedness or obligation which would have been included in those expressions but for anything referred to in this clause.
[25] Even if it could be argued that cl 3.1(i) was for the benefit of both parties and Geneva had failed to comply with it because before advancing the moneys it had not received the advice, cl 8.3 of the facility agreement would apply to confirm Mr Kang’s obligation under the guarantee.
[26] Mr Kang also referred to the case of Vuletic v Contributory Mortgage Nominees Ltd as an example of a case where the Court accepted all that a defendant had to do was have a “fairly arguable” defence.6 The proposition is with respect, no doubt correct, but there must be evidence to support the fairly arguable defence. In Vuletic v Contributory Mortgage Ltd, for example, the guarantor had not executed that part of the document as a guarantor. The finance company sought to argue her
6 Vuletic v Contributory Mortgage Nominees Ltd [2006] 7 NZCPR 552 (CA).
signature as a director extended to bind her as a guarantor. That is not the situation here.
[27] Mr Kang also noted that the facility referred to a loan of $450,000, but noted Geneva had advanced up to $795,000. However, as Mr Widjaya noted, cl 2.4 of the facility permitted Geneva, in its absolute discretion, to vary the facility limit. Further, the principal was in fact repaid in any event.
Undue influence
[28] Mr Kang relied on the written submissions he had presented to the District Court to support his submission he was acting under undue influence at the time he entered the guarantee. The short point is, however, there was no evidence before the Court to support the submission. Mr Kang’s submissions are not evidence.
[29] The submission that a commercial document such as a guarantee should be set aside or otherwise be unenforceable by reason of undue influence must be supported by credible evidence.7 The onus was on Mr Kang to provide a basis for undue influence to be an arguable defence.8 His evidence fell well short of doing so. There was nothing in the particular facility or the basis of dealing between Geneva, MHI or Mr Kang which called for an explanation.
[30] Further, in relation to the issue of undue influence Nigel Edwards, the collections manager for Geneva, gave evidence that at the time the facility was entered:
9. Under the Agreement, GCL has agreed, at Mr Kang's request, to make available to MHIL an invoice finance facility upon terms set out in the Agreement.
…
36. Mr Kang, in his capacities as director of MHIL and guarantor, entered into the Agreement with full knowledge of his obligations and an understanding of the terms and conditions. He has never disputed his liability for the amount owing under the Agreement, including the default interest charges.
7 Barclays Bank plc v O’Brien, above n 5.
8 Royal Bank of Scotland v Etridge (No 2), above n 5.
[31] Next, it is relevant that Mr Kang had not disputed the liability for the amounts owing, and only raised the issue of undue influence after the proceedings were issued.
The 1201 Okau Road, Ahititi Issue
[32] Mr Kang next submitted that the Judge had been wrong to dismiss his complaint that a mortgage over 1201 Okau Road was provided under duress and that the proceeds of sale of that property were taken unlawfully. Apart from Mr Kang’s assertions to that effect Judge Dawson had the evidence of Nigel Edwards on this point also. At paras 7.1 to 7.3 of his affidavit in reply, Mr Edwards deposed:
7.1The mortgage over 1201 Okau Road was based on a deed of guarantee and indemnity dated 15 November 2021 between GCL, 1201 Okau Road Limited (of which Mr Kang is its sole director) as Guarantor, and MHIL as Customer (Deed for 1201 Okau Road). The Deed for 1201 Okau Road was signed by Mr Kang and witnessed. A copy of this deed is annexed marked "A".
7.2The Deed for 1201 Okau Road contained a solicitor certificate dated 18 November 2021, signed by Jim Ku of Ku & Partners Limited, confirming Mr Ku’s satisfaction that Mr Kang fully appreciated the nature and extent of the guarantee and that there were no facts or circumstances that would affect the validity of the guarantee.
7 .3The sale of the property recorded in Record of Title 42162, which was owned by 1201 Okau Road Limited, was initiated by Mr Kang himself. GCL did not pressure him to sell that property to reduce the amounts owing by MHIL. He did all that of his own accord.
[33] On the basis of that evidence, the Judge was quite entitled to reject the suggestion that there had been any undue influence in relation to the grant of the mortgage over that property and the subsequent sale and application of the proceeds of sale.
[34] Mr Kang noted the sale proceeds from 1201 Okau Road had gone into his solicitor’s trust account and then directly to Geneva, but that does not answer Mr Edwards’ evidence that he was not pressured to sell the property.
The adjournment issue
[35] Although not raised in the notice of appeal Mr Kang complains that Judge Dawson also erred in failing to agree to adjourn the earlier preliminary hearing on 18
April. There is no merit in this additional submission. Mr Kang had sought an adjournment of that hearing and supported it by doctor’s notes and confirmation of a prescription. The Judge declined the application for adjournment on the basis the material failed to comply with Medical Council guidelines.
[36] Mr Kang submitted the Judge had made orders against him at the April hearing. However, the Judge’s minute and directions merely recorded the parties’ agreement and adjourned the substantive application for summary judgment. Mr Kang suggested he was prejudiced as he did not have time to challenge the interest claimed at that hearing, but as Judge Dawson noted, Geneva waived its strict contractual entitlements to the amount of penalty interest by the time of the hearing in August.
[37] In any event, nothing turns on this general point as it was a preliminary hearing. The substantive appeal was not heard until August, some four months later. Mr Kang had sought an adjournment of six weeks.
Result
[38] Individually and collectively, the appeal grounds raised by Mr Kang are without merit. The appeal is dismissed.
Stay
[39] The interim stay ordered by Robinson J is lifted. Geneva is free to pursue execution of the judgment it has obtained against Mr Kang.
Costs
[40] Geneva is to have costs on a 2B basis on this appeal in the sum of $11,950. The Registrar is directed to release the security paid to Geneva’s solicitors in part satisfaction of that sum.
Venning J
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