Lough Corrib Limited v NZ Finance Group Limited
[2025] NZHC 221
•20 February 2025
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2024-463-103
[2025] NZHC 221
BETWEEN LOUGH CORRIB LIMITED
Applicant
AND
NZ FINANCE GROUP LIMITED
Respondent
Hearing: On the papers Appearances:
David Hayes for the Applicant
David Neutze/A Elia for the Respondent
Judgment:
20 February 2025
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Application to exclude affidavit and consolidate proceedings]
This judgment was delivered by me on 20 February 2025 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
Hunwick Law Limited (Michael Hunwick), Hamilton, for the Applicant Brookfields (David Neutze/A Elia), Auckland, for the Respondent
Counsel:
David Hayes, Barrister, Taupo, for the Applicant
LOUGH CORRIB LIMITED v NZ FINANCE GROUP LIMITED [2025] NZHC 221 [20 February 2025]
Introduction
[1] Pursuant to the Court’s minute of 12 November 2024 Mr Hayes, counsel for the applicant, Lough Corrib Limited, has filed a memorandum dated 25 November 2024 and Mr Neutze, counsel for the respondent NZ Finance Group Ltd, filed a memorandum in response dated 10 December 2024.
[2] Mr Hayes submits that an affidavit filed on behalf of the respondent, sworn by Mr Craig Urquhart on 29 October 2024 (the Urquhart affidavit), breaches s 50 of the Evidence Act 2006 and breaches r 7.32 of the High Court Rules 2016. Mr Hayes also seeks a consolidation of this proceeding with two other proceedings in the Auckland High Court being:
(a)CIV-2024-404-000998, a proceeding brought by Dilseacht Trustee Limited (Dilseacht) seeking to invalidate guarantees it gave in respect of a loan from the respondent to the applicant (the 998 proceeding); and
(b)CIV-2024-404-001843, a proceeding brought by the respondent seeking to enforce the same guarantees and the guarantees given by Mr and Mrs Poulot (the 1843 proceeding);
(together, the Guarantee Proceedings).
[3] Mr Neutze in his memorandum in response submits that the Urquhart affidavit does not breach s 50 of the Evidence Act or the r 7.32 of the High Court Rules, and opposes consolidation of this proceeding with the Guarantee Proceedings.
Legal principles
[4]Section 50 of the Evidence Act 2006 provides as follows:
50. Civil judgment as evidence in civil or criminal proceeding
(1) Evidence of a judgment or a finding of fact in a civil proceeding is not admissible in a criminal proceeding or another civil proceeding to prove the existence of a fact that was in issue in the proceeding in which the judgment was given.
[(1A) Evidence of a decision or a finding of fact by a tribunal is not admissible in any proceeding to prove the existence of a fact that was in issue in the matter before the tribunal.]
(2)This section does not affect the operation of –
(a)a judgment in rem; or
(b)the law relating to res judicata or issue estoppel; or
(c)the law relating to an action on, or the enforcement of, a judgment.
[5]Rule 7.32 of the High Court Rules 2016 states that:
7.32 Previous affidavits and agreed statements of fact
(1)Affidavits already filed in the court and agreed statements of fact, if made in the same proceeding or, with the leave of a Judge, in any other proceeding between the same parties, may be use on the disposal of any application if –
(a)prior notice of the intention to use them has been given to the opposite party (whether in the notice of application or in the notice of opposition or otherwise); or
(b)in the case of an application without notice, they are referred to in the notice of application.
(2)Subclause (1) does not apply to an affidavit or to an agreed statement to the extent that the affidavit or statement contains any admission of the kind described in rule 7.31.
Striking out of Urquhart affidavit
Applicant’s position
[6] Mr Hayes submits that the Urquhart affidavit at paragraphs [3] and [4] refers to an affidavit Mr Urquhart filed in the 998 proceeding. He submits that the applicant is not a party to that proceeding and accordingly the affidavit in the 998 proceeding cannot be used in evidence.
[7] Mr Hayes submits that the reference in the Urquhart affidavit at paragraph [10] to the decision in Central Bulk Transport v Farmers First Logistics Limited1 is a breach of s 50 as neither party to this proceeding is involved in that proceeding.
[8] Mr Hayes refers to the decision of Attorney-General v Siemer,2 as setting out the applicable legal principles.
[9] Mr Hayes submits that the reference in the Urquhart affidavit to the affidavit filed is the 998 proceeding is intended to be evidence of facts. Reference to the Central Bulk Transport decision was intended to be used to rely on a finding in the Central Bulk Transport decision, which finding Mr Hayes submits was, in any event, incorrect.
[10] As to r 7.32, Mr Hayes submits the rule has no direct application as the rule only applies to affidavits in proceedings between the same parties. He submits the rule does not authorise the use of affidavits in other proceedings between different parties. He submits as a matter of general principle, allowing in an affidavit from another proceeding means that the maker of the affidavit is not available for cross- examination, breaching natural justice considerations.
[11]Mr Hayes seeks an order that the Urquhart affidavit be struck out in its entirety.
Respondent’s position
[12] Mr Neutze submits that while Mr Hayes is seeking an order that the Urquhart affidavit be struck out in its entirety, the only parts of the affidavit which are challenged are paragraphs [3] and [4], and [10]. As to paragraph [3], he submits that this just attaches two exhibits which are relevant to this proceeding and therefore no objection can be made to this paragraph.
[13] As to paragraph [4], Mr Neutze submits that it simply refers to and attaches as an exhibit ‘C’ a redacted version (without the exhibits) of Mr Urquhart’s affidavit in the 998 proceeding. He submits the unredacted parts of that affidavit are directly
1 Central Bulk Transport Limited v Farmers First Logistics Limited [2024] NZHC 440.
2 Attorney-General v Siemer [2022] NZHC 917 at [59] and [60], [66] and [72], [67] and [68] and
[70] and [71].
relevant to this proceeding and this was done as a matter of convenience as Mr Urquhart’s first affidavit in this proceeding referred to paragraphs and exhibits in his affidavit in the 998 proceeding and therefore attaching that affidavit assists in the reading of his first affidavit and his evidence as a whole.
[14] As to r 7.32, Mr Neutze submits that Mr Hayes’ assertions that the Urquhart affidavit breaches 7.32 are misconceived and there is no need for the respondent to seek leave under that rule as it is not seeking leave to refer to an affidavit in another proceeding. He submits, rather, the relevant parts of the same deponent’s earlier affidavit plus some relevant exhibits, are conveniently attached as exhibits to the Urquhart affidavit. He points out that the alternative approach would have been for Mr Urquhart to have included in the body of the Urquhart affidavit the relevant parts of his affidavit in the 998 proceeding but this was simply not necessary.
[15] As to Mr Hayes’ assertion that relying on parts of the previous affidavit breaches natural justice because the deponent will not be available for cross- examination, Mr Neutze submits this is clearly wrong as Mr Urquhart is the deponent of both affidavits and will be available for cross-examination if and when this proceeding goes to trial.
[16] As to s 50 of the Evidence Act, Mr Neutze accepts that the respondent will not rely on the Central Bulk Transport judgment, nor paragraph [10] of the Urquhart affidavit. A direction is made below accordingly.
Consolidation
Applicant’s position
[17] Mr Hayes submits that this proceeding should be consolidated with the Guarantee Proceedings. He makes the following points:
(a)Dilseacht invested $4,000,000 in Kiwi Funds No.1 Limited (Kiwi Funds) and the applicant borrowed $500,000 from the respondent, a company funded by Kiwi Funds, with a common director.
Dilseacht guaranteed on the $4,000,000 to NZ Trade Finance Limited (NZTF) repayment of the loan made to the applicant;
(b)Dilseacht is suing Kiwi Funds and NZTF` on two grounds, being breach of the loan agreement and obtaining the guarantee by deception. NZTF is suing Dilseacht and Mr and Mrs Poulot to enforce the guarantee. Those cases have been consolidated as they relate to the same guarantee.
(c)The respondent then issued a statutory demand for the $500,000 loan against the applicant. The loan was to be used to purchase shares in a company (Farmers First Logistics Limited) that was financed by NZTF.
(d)The applicant has applied to set aside the demand on the basis the loan was unenforceable because it was made by deception given the director of NZTF was aware the loan was to be paid to NZTF which was owed money by Farmers First.
(e)The evidence about all three cases comes from Mrs Poulot who was involved in all three, and is based on the same factual evidence and therefore it is in the interests of justice that all three cases be heard together as there is evidential commonality and doing so avoids the risk of inconsistent decisions, such as a decision that Dilseacht is not liable under the guarantee but a finding there is no arguable case to set aside the statutory demand.
Respondent’s position
[18] Mr Neutze opposes the request for consolidation and submits that the interests of justice, including the just, speedy and inexpensive determination of this application, it is best served by the application to set aside the statutory demand being heard separately for the following reasons:
(a)The applicant does not have a genuine or substantial dispute as to its liability to repay the loan. It does not deny it received the loan and has failed to repay it;
(b)any suggestion the applicant was deceived or misled into obtaining the loan is disingenuous, particularly given the applicant refinanced the loan in October 2023. If its dispute was genuine, it would have raised the issues then;
(c)no common questions of law arise between this application and the Guarantee Proceedings. The statutory demand process ultimately leads to liquidation proceedings which focus on liquidity and asset worth in accordance with the fundamental principle that insolvency should bring an end to a company’s existence;
(d)the relevant factual matrix has been adequately put before the Court in affidavit evidence. There is no advantage to be gained in consolidating this application with the Guarantee Proceedings;
(e)an application to set aside a statutory demand is, in its nature, a truncated, summary process. The time and expense of taking the application to a full trial is unnecessary and unwarranted;
(f)consolidation would have the practical effect of an excessive adjournment under the guise of consolidation. There is a significant risk to third party creditors and the respondent in allowing the applicant to continue to trade, accrue further default interest and incur legal costs until the Guarantee Proceedings are determined which is unlikely to occur prior to 2026.
Result
[19] As to Mr Hayes’ contention that paragraphs [3] and [4] of the Urquhart affidavit breached r 7.32 of the High Court Rules, I am of the view that this is not the
case. Paragraph [3] simply attaches two emails as exhibits and is unobjectionable. As to paragraph [4], Mr Urquhart’s earlier affidavit in the 998 proceeding is not being used as an affidavit in this proceeding, but parts of it are attached to a fresh affidavit, the Urquhart affidavit, sworn by Mr Urquhart in this proceeding. Consequently r 7.32 has no application as the affidavit from the 998 proceeding is not being used in disposal of this proceeding. As pointed out by Mr Neutze, Mr Urquhart could have repeated the non-redacted parts of the affidavit from the 998 proceeding in the Urquhart affidavit but this was unnecessary. In my view there is no objection to paragraph [4] of the Urquart affidavit. As to paragraph [10], Mr Neutze has conceded this paragraph and the Central Bulk Transport judgment and paragraph [10] will not be relied upon by the respondent.
[20] As to consolidation, I am of the view that no order for consolidation should be made. I am not satisfied that there is sufficient commonality of facts between the Guarantee Proceedings and this proceeding to justify consolidation and in any event the statutory demand process and liquidation proceedings which may follow from it are a totally different procedure and type of proceeding to the Guarantee Proceedings. Consolidating this proceeding with the Guarantee Proceedings will cause unwarranted delay to the statutory demand proceeding which is intended to be a truncated summary proceeding.
Orders
[21]I make the following orders:
(a)The applicant’s application for parts or all of the Urquhart affidavit to be struck out is dismissed, except to the extent that paragraph [10] of the Urquhart affidavit should not be read.
(b)The applicant’s application for consolidation of this proceeding with the Guarantee Proceeding is dismissed.
(c)As the respondent is largely the successful party, costs should follow the event. Counsel are directed to endeavour to agree costs and failing agreement being reached within a period of 20 working days from the date of this judgment, counsel for the respondent will file a memorandum as to costs (not to exceed five pages) within 5 working days of the 20 working day period, and counsel for the applicant will file a memorandum (not to exceed five pages) in response within 5 working days of receipt of counsel for the respondent’s memorandum. A decision as to costs will then be made on the papers.
…………………………….. Associate Judge Taylor
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