Madeley Limited v Vacuum NZ Limited HC Auckland CIV 2010-404-1028

[2010] NZHC 968

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2010-404-1028

BETWEEN  MADELEY LIMITED Plaintiff

ANDVACUUM NZ LIMITED First Defendant

ANDLAURENCE WALLS Second Defendant

ANDVALERIE WALLS Third Defendant

Hearing:         18 June 2010

Appearances: Ms J M Trotman for plaintiff

Mr R Espie for defendants

Judgment:      18 June 2010

ORAL JUDGMENT OF ASSOCIATE JUDGE DOOGUE

Counsel

J M Trotman, Barrister, Silverdale – by email:  [email protected]

R Espie, Barrister, Whangaparaoa – by email: [email protected]

MADELEY LIMITED V VACUUM NZ LIMITED AND ORS HC AK CIV 2010-404-1028  18 June 2010

[1]      In this case the plaintiff brought proceedings against the defendant to recover a sum of $300,000 which it alleges was advanced pursuant to a loan agreement dated

7 December 2007.  The loan was part of the purchase price for a business which the defendants purchased from the plaintiff.  A dispute has emerged between the parties as to when the $300,000 was due to be repaid.   The loan agreement, the plaintiff says, called for repayment on 3 December 2009, but the defendants had the option to extend that term by virtue of a provision in table G to the loan agreement, which gave the term as being “From third day of December 2007 with right to extend for a further year expiring 3.12.2010”.

[2]      The plaintiff’s position is that no extension was sought or granted and that therefore the loan become due for repayment on 3 December 2009.  The defendants contend that, as matter of contractual interpretation, that is incorrect and that when the contract is properly interpreted, having regard to the fact for example that the various interest rates were prescribed in the agreement including one relating to the period  up  to  3  December  2010,  the  true  contractual  intention  of  the  parties objectively considered was that the loan was repayable in 2010 and not 2009.

[3]      The  parties  raised  with  Associate  Judge  Christiansen  in  a  telephone conference whether this was an appropriate case for a separate question to be determined by the Court under r 10.14 of the High Court Rules and following. Significantly, at the time when that matter was raised before Associate Judge Christiansen, the state of the pleadings did not include any counter-claim.   I now need to say something brief about the counter-claim.

[4]      In the statement of defence that the defendants filed they made reference to certain misrepresentations which they say were made to them, and in reliance upon which they entered into the agreement for sale and purchase of the business.  The document does not make clear how that would defeat the rights of the plaintiff under the loan agreement.   However during the course of questions from me today Mr Espie for the defendants told me that a counter-claim had been filed.  There is in fact no counter-claim on the file but I accept that one has been drafted and that Mr Espie actually believed that it had been filed.   The draft counter-claim sets out in some

detail various bases for counter-claims which the defendants allege against the plaintiffs.  These include, for example, the fact that, while the plaintiff represented that it was the sole New Zealand agent for BOC-Edwards products, what they had not revealed was that because the plaintiff had not met stipulated performance targets in 2009, BOC-Edwards removed the sole agency and as a result the defendants have suffered loss.

[5]      Returning to the key issue in this case, I am required to consider whether this is a suitable case for the Court to direct a separate decision of a question.   The question which the parties have identified is essentially whether the loan was repayable in December 2009 or December 2010.  If it was repayable in December

2010 the plaintiff cannot obtain judgment because it is too early.  It would have to wait until December of this year.  But in any event, quite apart from the timing point, the defendants, by their intended counter-claim, make it clear that there is another major issue in this proceeding and that is the question of the alleged misrepresentations.  The question of when the loan becomes repayable is a separate one from the question of the misrepresentations. The misrepresentations will remain as live issues between the parties that will need to be resolved by the Court whether the Court concludes that the loan was repayable in 2009 or at a later date which has not yet arrived.  In my view, there is no advantage, therefore, in referring this matter to the Court for separate decision of a question.  Mr Espie said that if the defendants won on the issue about the date of the loan repayment they would then to seek to negotiate a settlement with the plaintiff.  But all that the separate question would tell the plaintiffs is that if they were unsuccessful they have a further six months to wait until their loan becomes repayable.   It would say nothing about the strength or otherwise of the misrepresentation claims that the defendants say they have available to them in answer to the claim based on the loan.  For those reasons I dismiss the application.   The proceeding should now be timetabled.   I am told that Associate Judge Christiansen considered that step should not be taken at this point because there was the pending application under r 10.4.  However, as it has become plain to me, His Honour was not aware of the fact that an extensive counter-claim was in the offing and which it seems will shortly be filed.

[6]      I make the following timetable directions:

a)        The statement of defence to counter-claim is to be filed and served by

25 June 2010;

b)       Any defence to the counter-claim is to be filed and served by 16 July

2010;

c)        The  parties  are  to  provide  affidavits  of  documents  by 13  August

2010.

d)       Inspection is to be completed by 3 September 2010.

[7]      The proceeding is suitable for the standard track and costs category 2.

[8]      The Registrar is to allocate a telephone case management conference not before 30 September 2010.

[9]      The application for direction of a separate question was brought by the defendants.   Rule 14.2(a) provides that the party who fails with respect to a proceeding or a interlocutory application should pay costs to the party who succeeds. That principle seems applicable here and I direct that the defendants are to pay costs

on a 2B basis.

J.P. Doogue

Associate Judge