King v PFL Finance Limited - [2012] NZHC 2414

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-1734 [2012] NZHC 2414

BETWEEN THOMAS FREDERICK MAZLIN KING AND JUDITH RUTH KING AS TRUSTEES OF THE TFM AND JR KING PARTNERSHIP
First Plaintiff

ANDHAVELOCK FARMS LIMITED Second Plaintiff

ANDPFL FINANCE LIMITED First Defendant

ANDCRAIG BEECROFT Second Defendant

Hearing: 14 September 2012

Appearances: A J Woodhouse and A C Poole for Plaintiffs
K M Quinn for Defendants

Judgment: 18 September 2012

REASONS JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 18 September 2012 at 4:30 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date: ...................................

Solicitors: Carter & Partners, Auckland: tonyw@carterslaw.co.nz / alicep@carterslaw.co.nz
Heimsath Alexander, Auckland: angela@halaw.co.nz

Counsel: K M Quinn, Auckland: kelly.quinn@bankside.co.nz

KING V PFL FINANCE LIMITED HC AK CIV-2012-404-1734 [18 September 2012]

[1] The trial of this matter is due to commence on 1 October 2012. On

14 September 2012 I heard three interlocutory applications, being the Plaintiffs’ applications for leave to amend their statement of claim and for interim orders, and the Defendants’ application for security for costs against the Second Plaintiff (“HFL”). The First Plaintiffs (“Mr and Mrs King”) are legally aided.

[2] Each application is opposed, wholly or in part.

[3] On 17 September 2012 I issued a results judgment, allowing in part the application for leave to amend but declining the other applications. My reasons are as follows.

Background

[4] The First Defendant (“PFL”) advanced more than $3.3 million to HFL in July

2011, for a term of one year. Mr King is the sole director of HFL. Mr and Mrs King and three sons guaranteed HFL’s performance of its obligations. HFL is the registered proprietor of land referred to as Havelock Farm, and that land has been in the ownership of the King family for more than 130 years.

[5] In January 2012, PFL appointed a receiver of HFL, that receiver being the Second Defendant. PFL’s case is that that HFL had defaulted on payments of interest due in November and December 2011 and in January 2012, which defaults had not been remedied at the time PFL appointed the receiver.

[6] After his appointment the receiver ceased the farming operation and took steps to realise assets. The assets include the land of which HFL is the registered proprietor and which it had leased to the Plaintiffs. The receiver terminated the lease and called for tenders to purchase the land and other assets. More recently, the receiver has entered into an agreement for sale and purchase in respect of the “home block” and other assets, and is now in negotiations to sell the remainder of the farm, being the “run off block”.

[7] The Plaintiffs commenced proceedings at the end of March 2011. Broadly speaking, they take issue with two matters.

[8] The first is whether PFL was entitled to appoint a receiver when it did. The Plaintiffs’ case is that in late October 2011 HFL and PFL agreed that HFL could defer the interest payment due…

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: [2012] NZHC 2414
Decision Date: 18 September 2012

CaseChat Overview and Summary

This case involves a dispute between the plaintiffs, Thomas Frederick Mazlin King and Judith Ruth King as trustees of the TFM and JR King Partnership, and the defendants, PFL Finance Limited and Craig Beecroft. The plaintiffs are seeking to amend their statement of claim and obtain interim orders, while the defendants have applied for security for costs against the second plaintiff, Havelock Farms Limited. The case is set down for trial on 1 October 2012, and the plaintiffs require leave to amend their statement of claim. The defendants do not object to most of the proposed amendments, but object to the inclusion of a cause of action in waiver or for estoppel. The plaintiffs had previously abandoned this cause of action before the Court of Appeal, but now seek to reinstate it based on new evidence. However, the court is not satisfied that the circumstances justify allowing the plaintiffs to change their position, and orders that the cause of action in waiver and estoppel be omitted from the amended statement of claim. The plaintiffs also seek interim orders to restrain the defendants from entering into an agreement for sale and purchase of the "home block" and other assets, on the basis that the defendants have acted in accordance with a pre-meditated plan to sell the farm to someone associated with the receiver. However, the court is not satisfied that the new evidence justifies granting the orders sought, and declines the application. Finally, the defendants seek an order that Havelock Farms Limited provide security for costs in the amount of $65,000. The court declines the application, taking into account that the plaintiffs' case is to go to trial regardless of Havelock Farms Limited's position, and that the defendants could have made the application for security for costs earlier. Costs are to lie where they fall, subject to the orders for costs and security for costs.
In this case, the court had to decide three main legal issues. The first was whether the plaintiffs should be allowed to amend their statement of claim to include a cause of action in waiver or for estoppel, despite having previously abandoned it before the Court of Appeal. The second was whether the plaintiffs had provided sufficient evidence to justify granting interim orders to restrain the defendants from entering into an agreement for sale and purchase of the "home block" and other assets. The third was whether the court should order Havelock Farms Limited to provide security for costs in the amount of $65,000. In relation to the first issue, the court held that the plaintiffs should not be allowed to change their position and reinstate the cause of action in waiver and estoppel, as there was no good reason to do so and it would cause inconvenience to the defendants. In relation to the second issue, the court held that the new evidence did not justify granting the orders sought, as it did not provide any basis for doing so. In relation to the third issue, the court declined to make the order for security for costs, taking into account that the plaintiffs' case was to go to trial regardless of Havelock Farms Limited's position, and that the defendants could have made the application for security for costs earlier. The court held that the defendants were entitled to costs and disbursements, and that the plaintiffs' solicitors should pay those costs. The court also held that there was no prospect of recovery from the plaintiffs themselves.

Orders