Mahon v Waimauri Ltd - [2022] NZCA 96

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA338/2020
[2022] NZCA 96

BETWEEN	NEVILLE CHRISTOPHER MAHON First Appellant BEACH ARENA LIMITED Second Appellant
AND	WAIMAURI LIMITED First Respondent TIMOTHY LAIRD EDNEY Second Respondent WAIKORO LIMITED Third Respondent

Hearing:	16 September 2021
Court:	Cooper, Brown and Goddard JJ
Counsel:	D G Collecutt for Appellants D J Chisholm QC and M J W Lenihan for Respondents
Judgment:	30 March 2022 at 11.00 am

JUDGMENT OF THE COURT

AThe application for leave to amend the appellants’ second amended statement of defence and counterclaim, and the notice of appeal, is declined.
BThe appeal is dismissed.
CThe appellants must pay costs to the respondents for a standard appeal on a band A basis, with usual disbursements. We certify for second counsel.

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Table of contents

Para no

Introduction

Background[10]

The proceedings

Two sets of proceedings are filed

Application to amend counterclaim in Waimauri proceedings shortly before trial

The amended pleading before the High Court at trial

The defence to the counterclaims

High Court judgment

The appeal to this Court

Appellants’ submissions on appeal

Respondents’ submissions on appeal

Discussion

The proposed amendments amount to a new cause of action

Abuse of process

Misrepresentation claims not available as a defence to Waimauri’s claim

Other grounds for opposing amendment

Result

Appendix A

REASONS OF THE COURT

(Given by Goddard J)

Introduction

Waimauri Ltd (Waimauri) made advances to Beach Arena Ltd (BAL) under a loan agreement entered into in September 2013 (the loan agreement). Mr Mahon, the controller of BAL, guaranteed BAL’s obligations to Waimauri.
BAL’s need to borrow arose in connection with certain properties it had leased from Waikoro Ltd (Waikoro), including the former Station Hotel on Beach Road in Auckland. Waikoro, which owned the properties, and Waimauri, the company that made the advances to BAL, were both controlled by Mr Edney, a longstanding business associate of Mr Mahon.
In circumstances described in more detail below, significant differences arose between Mr Mahon and Mr Edney. Waikoro terminated the lease and sold the properties. Waimauri made demand under the loan agreement.
Waimauri brought proceedings against Mr Mahon as guarantor under the loan agreement. Mr Mahon defended that claim, and joined BAL as a counterclaim plaintiff. BAL counterclaimed against Waimauri, Mr Edney, and Waikoro. Mr Mahon and BAL pleaded that an agreement had been entered into in November 2013 (described as the “variation agreement”) under which they were released from any liability under the loan agreement, and were entitled to be paid the surplus realised by Waikoro on sale of the properties. The counterclaims were identified in the pleadings as claims in contract, estoppel and restitution. They were all founded on the variation agreement.
In the High Court the counterclaims by Mr Mahon and BAL were unsuccessful. Waimauri’s claim under the loan agreement was successful, but for a sum substantially less than it had originally claimed.[1]
[1]Waimauri Ltd v Mahon [2020] NZHC 1170 [High Court judgment].
Mr Mahon and BAL filed an…

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.

Continue reading Mahon v Waimauri Ltd

Details

AGLC: Mahon v Waimauri Ltd [2022] NZCA 96
Case: [2022] NZCA 96
Decision Date: 30 March 2022 at 11.00 am

CaseChat Overview and Summary

The Court of Appeal of New Zealand considered an appeal by Neville Mahon and Beach Arena Ltd against a judgment of the High Court in proceedings brought by Waimauri Ltd against Mr Mahon as guarantor under a loan agreement. The primary issue before the Court of Appeal was whether the appellants should be permitted to make substantial amendments to their pleadings and notice of appeal in order to add claims for misrepresentation relating to insurance premiums, the earthquake rating of the hotel, and defects in the properties. The Court of Appeal found that the proposed amendments amounted to a new cause of action that had not been pleaded before the High Court, and that permitting such amendments would be an abuse of process and would prejudice the respondents. The Court also found that the proposed misrepresentation claims would not provide a basis for impugning the judgment in favour of Waimauri against Mr Mahon. Accordingly, the Court declined leave to amend the pleadings and notice of appeal, and dismissed the appeal. The appellants were ordered to pay costs to the respondents for a standard appeal on a band A basis, with usual disbursements.

Orders