Nobilo v Nobilo
[2023] NZHC 1450
•13 June 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-002154
[2023] NZHC 1450
BETWEEN MARCO NOBILO
Plaintiff
AND
VALERIE JOY NOBILO and VLAW
TRUSTEES (2019) LIMITED as trustees of the S Nobilo Family Trust
Defendants
Hearing: 15 May 2023 Appearances:
R Norris for the Plaintiff
No appearance by or for the Defendants
Judgment:
13 June 2023
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 13 June 2023 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
MDS Law, Christchurch R Norris, Christchurch
NOBILO v NOBILO [2023] NZHC 1450 [13 June 2023]
Introduction
[1] Marco Nobilo (Mr M Nobilo) applies for summary judgment of his claim against the trustees of the S Nobilo Family Trust.
[2] The claim is for recovery of an inter-family debt following realisation and distribution of the assets of the Nikola Nobilo Family Trust (the NNT), a trust originally settled by Mr M Nobilo’s father. Mr M Nobilo is one of three Nobilo brothers, together with Nicholas Thomas Nobilo (Mr N Nobilo) and Stephen Nobilo (Mr S Nobilo).
[3] At a family meeting in September 2015 following their mother’s death, the Nobilo brothers agreed to realise and distribute NNT’s assets, and wind it up. They also agreed to vary the original distribution of the NNT which was divided between themselves in equal thirds to a 30:30:40 split in Mr M Nobilo’s favour (the Agreed Split). This split recognised that both Messrs N and S Nobilo had used the property as security for their various business adventures, whereas Mr M Nobilo had not.
[4] The NNT’s only asset of value was the former family homestead at Station Road, Huapai (the Homestead). Before the Homestead could be sold, the borrowings of Messrs N and S Nobilo’s respective family trusts needed to be repaid. The brothers’ family trusts were not beneficiaries of the NNT and were not entitled to any distribution. Neither Mr S Nobilo or Mr N Nobilo had the financial means to repay the borrowings.
[5] Mr M Nobilo agreed to advance funds from his distribution of the NNT to each of his brothers’ family trusts as a short-term loan to enable the borrowings to be repaid so the Homestead could be sold. Mr M Nobilo advanced $532,525 to Mr S Nobilo’s family trust (the S Nobilo Family Trust) and $624,362.15 to Mr N Nobilo’s family trust (the NT Nobilo Family Trust).
[6]Other than modest interest payments, the loans have not been repaid.1
1 The S Nobilo Family Trust paid interest of $39,000 between August 2019 and April 2022.
[7] Mr M Nobilo now applies for summary judgment against the S Nobilo Family Trust for $670,499.35, being the principal advanced and interest.
[8] The S Nobilo Family Trust filed a notice of opposition and evidence in support, but its counsel and solicitor withdrew before the hearing.
[9] The essential issue is whether Mr M Nobilo has established that he advanced the sum claimed to the S Nobilo Family Trust as a loan, and that the S Nobilo Family Trust has not repaid the loan, in breach of the loan agreement.
[10] To enter summary judgment, I must be satisfied that none of the grounds raised by the S Nobilo Family Trust in its notice of opposition are reasonably arguable.
Legal principles
[11]Rule 12.2(1) of the High Court Rules 2016 provides:
The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[12] The relevant principles governing a summary judgment application are well established:2
The question … is whether the defendant has no defence to the claim; that is, that there is no real question to be tried. 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. 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. 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.
(footnotes omitted)
2 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].
Was there a loan agreement and what were its terms?
[13] The S Nobilo Family Trust does not dispute that there was a loan. It appears, from the notice of opposition and affidavits filed, that the Trust disputes two points. First, that the loan was between Mr M Nobilo and the S Nobilo Family Trust. The Trust contends that the loan was between Mr M Nobilo and Mr S Nobilo personally. Second, the Trust appears to dispute the amount of the loan, suggesting that it was only
$100,000.
[14] Based on the contemporaneous evidence, I am satisfied that Mr M Nobilo and Mr S Nobilo agreed that Mr M Nobilo would advance to the S Nobilo Family Trust enough funds to repay the Trust’s loan with FM Custodians secured over the NNT property. It was agreed that the advance would be made from Mr M Nobilo’s share of the distributions from NNT. Further, that the loan was to be for a short term until the S Nobilo Family Trust could find alternative finance. Specifically, the loan was to be repaid by 30 April 2016 together with interest of five per cent on the sum advanced.
[15]I base this conclusion on the following evidence.
[16] Handwritten minutes of a meeting at the offices of Haigh Lyon on 27 January 2016, attended by the three brothers, Mr S Nobilo’s son Mr S Nobilo Jr, Tim Livingstone (NNT’s accountant), Leigh Judd (Mr S Nobilo’s solicitor) and Don and A’lanah Harrison of Haigh Lyon, the Nobilo family’s longstanding lawyers. Ms Harrison is the author of the minutes. The purpose of the meeting was to discuss a draft Deed of Variation (the Deed) that had been prepared recording the brothers’ decisions about the NNT, the distributions from NNT and its winding up.3 The Deed recorded, amongst other things, that the beneficiaries had requested the trustee (then Mr N Nobilo as sole trustee) to distribute the assets of the NNT and wind it up. The Deed further directed that the Homestead was to be sold, with the proceeds to be divided according to the Agreed Split, with Messrs N and S Nobilo to repay all debt secured over the property. An attached ‘Summary of Mortgage Loans and Interest’ sets out an apportionment of the joint FM Custodians loan and interest between Messrs N and S Nobilo’s respective family trusts.
3 Affidavit of Leigh Judd, sworn 15 February 2023.
[17] At or prior to the meeting Haigh Lyon shared a draft settlement statement (the Draft Statement)4 showing the proposed distributions of the sale proceeds to the brothers according to the Agreed Split, less repayments by Messrs N and S Nobilo to clear the FM Custodians debt and in Mr N Nobilo’s case to repay a loan to Dorchester Finance. The Draft Statement records that the amount of the FM Custodians loan allocated to each of Mr N Nobilo’s and Mr S Nobilo’s Trusts was to be as per Mr N Nobilo’s calculations dated 20 August 2015. This is understood to refer to the ‘Summary of Mortgage Loans and Interest’ document. The projected allocations between Messrs N and S Nobilo in the Draft Statement correspond to the figures in that document. The Draft Statement records that after the loans were repaid there would be a shortfall of $866,486.81 in Mr N Nobilo’s case, and $201,136.88 in Mr S Nobilo’s case. The Draft Statement records that Mr M Nobilo would advance funds to Messrs N and S Nobilo to meet the shortfalls between the debts of their trusts and distributions to them personally as beneficiaries of the NNT, leaving a balance payable to Mr M Nobilo of $150,687.54.
[18] The handwritten minutes record that Mr M Nobilo had “made a commitment on the basis he receives $1.2 million on 29 February 2016 to assist Mr S Nobilo for one month on commercial terms (interest rates) until 1 April”. The notes also record that Mr M Nobilo wanted to make the same arrangement with Mr N Nobilo that he had with Mr S Nobilo (loaning approximately $200,000 to $500,000 to repay the amount owing by the S Nobilo Family Trust).
[19] In a follow-up email on 28 January 2016, Mr S Nobilo Jr thanked Mr M Nobilo for his assistance with the short-term loan, recording that the S Nobilo Family Trust had secured bridging finance to pay the mortgagee by the end of the week, and that the bridging finance was based on repayment to the lender in a month/five weeks’ time from funds from the sale of the Homestead which were due to Mr M Nobilo. Mr S Nobilo Jr also confirmed that they would pay interest to Mr M Nobilo on this advance until the loan was repaid in full.
4 Misdated 21 January 2015, with the correct date almost certainly being 21 January 2016.
[20] In an email later that day, Mr S Nobilo Jr informed Mr N Nobilo that they needed a statement from him as trustee of the NNT that upon settlement of the sale of the Homestead on 29 February 2016, $400,000 of the proceeds would be advanced to Mr M Nobilo as beneficiary of the NNT, who would provide a statement confirming that those funds were then being advanced to the S Nobilo Family Trust.
[21] On 31 January 2016, Mr S Nobilo Jr asked Haigh Lyon to provide a formal record, signed by Messrs N and M Nobilo, of the “family decisions” that had been made for their short-term lending. It appears that in response Haigh Lyon circulated the handwritten minutes.
[22] On 15 February 2016, Ms Judd emailed Ms Harrison stating that it had been agreed that an updated loan summary with further information regarding the loan and cost allocation between the S Nobilo Family Trust and the NT Nobilo Family Trust was to be provided by 11 February 2016. Ms Judd said that with settlement of the sale of the Homestead imminent, it was preferable to have the matter of the loan allocation finalised and agreed before then.
[23] On 19 February 2016, Mr M Nobilo confirmed in an email to Mr N Nobilo that he required his distribution from the NNT, of between $300,000 to $500,000, to assist the S Nobilo Family Trust with their short-term financing shortfall until the end of March when their long-term bridging finance was in place.
[24] On 29 February 2016, settlement of the sale of the Homestead took place. The following payments were paid out of Haigh Lyon’s trust account:5
(a)deposit split between Mr N Nobilo and Mr S Nobilo ($242,806.05 and
$249,402.78 respectively);
(b)FM Custodians repaid in full ($1,893,312.46);
(c)Dorchester Finance repaid in full ($435,471.48);
5 Haigh Lyon trust account records.
(d)Mr M Nobilo paid $164,379.99 (four instalments of $150,000,
$5,904.30, $1,122.10, and $7,353.59).
[25] On 2 March 2016, Mr M Nobilo transferred $100,000 from his personal bank account to the S Nobilo Family Trust’s bank account.
[26] On 14 March 2016, Mr S Nobilo Jr confirmed by email to Mr M Nobilo that the S Nobilo Family Trust would repay the funds it had borrowed from Mr M Nobilo by 30 April 2016 and would pay five per cent interest. Mr S Nobilo Jr has deposed that this was a reference to the $100,000 loan only. This evidence is lacking in credibility. The records show that the S Nobilo Family Trust’s share of the loan with FM Custodians was repaid using Mr M Nobilo’s distribution from the NNT. This share was considerably more than $100,000.
[27]On 20 April 2016, Mr S Nobilo Jr said to Mr M Nobilo:
Thirdly, with regards to repaying you on the 30th. We have been working on the refinancing and are struggling to get the finance. All indications from the broker over last few months were that the lender was happy with amount and prepared to go ahead in the new financial year. We are now having trouble getting an offer through as per previous indications. We are still working on it.
…Given that we had an arrangement with you to repay by the 30th and you have plans for buying a house, we have the option to immediately go back to our real estate agent and get her to contact some of the people who are still interested in the property.
If possible, we would still like to progress the situation with Nick and see if we can get him to come to an agreement, but this will take more time, which was not the arrangement we had with you…
But when it comes down to it, it’s over to you. You lent the money to us in good faith, which helped us tremendously and we very much appreciate it.
…
[28] A final distribution statement (Distribution Statement) prepared by Haigh Lyon dated 3 July 2017 records the balances owed to Mr M Nobilo after the loans to FM Custodians and Dorchester were repaid. The Distribution Statement is stated to be a draft and Haigh Lyon’s cover email records that the figures were not agreed. The Distribution Statement records that Mr N Nobilo owed Mr M Nobilo
$624,362.15 after Mr N Nobilo received 30 per cent of the sale proceeds and after the loans and other costs were paid.6 It records that Mr S Nobilo owed Mr M Nobilo
$432,525.67 after Mr S Nobilo received 30 per cent of the sale proceeds and loans and costs were paid. The Distribution Statement records that of Mr M Nobilo’s 40 per cent share of the sale proceeds ($1,221,267.81) the total amount paid out to Mr M Nobilo was $164,379.99. The balance was tied up in the loans to the NT Nobilo Family Trust and the S Nobilo Family Trust.
[29] The amount now claimed by Mr M Nobilo from the S Nobilo Family Trust is the $432,525.67 recorded in the Settlement Statement and the $100,000 advanced from Mr M Nobilo’s personal account.
Are any of the defences raised by the S Nobilo Family Trust reasonably arguable?
Mr S Nobilo withdrew his consent to the Agreed Split
[30] As I understand it, the defence is that Mr S Nobilo withdrew his consent to the Agreed Split when a dispute arose with Mr N Nobilo over the apportionment of interest on the FM Custodian loan between their respective family trusts.
[31] Because of this dispute, neither Messrs S or N Nobilo were willing to commit to repaying the family trusts’ loans from Mr M Nobilo. The dispute between Messrs N and S Nobilo resulted in litigation. An out of Court settlement was reached in mid-2019.
[32] There is no evidence that Mr S Nobilo withdrew his consent to the Agreed Split before he accepted the loan from Mr M Nobilo, if at all. This defence is inconsistent with the contemporaneous documents.
[33] Mr M Nobilo’s undisputed evidence is that the brothers agreed to the Agreed Split at the 12 September 2015 meeting. As noted earlier, the draft Deed recorded the
6 The Statement refers to ‘Mark’, ‘Steve’ and ‘Nick’, but it is obvious from the surrounding documents that Mr M Nobilo’s loans were to enable the S Nobilo Family Trust and N T Nobilo Family Trust to repay FM Custodians and Dorchester Finance.
Agreed Split and the request to Mr N Nobilo, as sole trustee of NNT at the time, that the NNT be wound up and its assets distributed.
[34] Mr S Nobilo engaged Ms Judd in October 2015. In a letter to Mr S Nobilo and his wife Ms Valerie Nobilo (Ms V Nobilo) dated 22 October 2015, Ms Judd states that she has reviewed the draft Deed and the loans summary prepared by Mr N Nobilo. She confirms that Mr S Nobilo has advised that he had agreed to a 30:30:40 split with his brothers. Ms Judd raises several issues with the loans summary that require clarification, concerning interest payments.
[35] The Draft Statement discussed at the January 2016 meeting is based on the Agreed Split. In a follow-up email to Ms Harrison on 28 January 2016, Ms Judd asked for the minutes of the meeting. She stated that “[o]f importance to our client is the further information that is to be provided by Nick’s accountant … in relation to the loans and interest that is to be apportioned between the NTN Family Trust and the SN Family Trust …”. Ms Judd does not raise any issue with the Agreed Split.
[36] Through February 2016, Ms Judd continued to correspond with Haigh Lyon on issues around the loan allocation between Messrs N and S Nobilo.7 There is no suggestion in this correspondence that Mr S Nobilo withdrew his consent to the Agreed Split.
[37] On 10 February 2016, Ms Judd wrote to Ms Harrison copying the queries she had raised with Mr S Nobilo in relation to the loan summary document.
[38] As noted, sale of the Homestead took place on 29 February 2016. Mr M Nobilo’s distribution was allocated towards the FM Custodian and Dorchester Finance loans. Haigh Lyon sent a settlement statement (the Settlement Statement) to Mr S Nobilo on 1 March 2016. This Settlement Statement records the Agreed Split and the loans from Mr M Nobilo to both the NT Nobilo Family Trust and the S Nobilo Family Trust to repay the loans. Mr S Nobilo/the S Nobilo Family Trust accepted the loan without objection and, on 14 March 2016, confirmed that Mr M Nobilo would be repaid.
7 Correspondence from Ms Judd dated 10 February, and 16 February 2016.
[39] On 11 March 2016, Ms Judd wrote to Haigh Lyon, saying that she had reviewed the Settlement Statement and the Summary of Mortgage Loans and Interest forwarded to Mr S Nobilo on 1 March 2016. She raised several queries. These concerned: the interest paid by the NTN Family Trust; the FM Custodians loan fees and legal fees, the FM Custodians interest and penalty fees; and changing the trustee for the NNT. Ms Judd did not raise any issue with the Agreed Split.
[40] Mr Livingstone has sworn an affidavit. He deposes that to the best of his knowledge the 30:30:40 split between the brothers has never been disputed.
[41] I note that Ms V Nobilo has deposed that she and Mr S Nobilo became aware of Mr N Nobilo’s proposed apportionment of the loan to the S Nobilo Family Trust after the Haigh Lyon meeting (in January 2016). She says that changed everything, and the proposed 30:30:40 split became impossible. That evidence is inconsistent with the contemporaneous record I have just described.
[42] The only evidence of Mr S Nobilo questioning the Agreed Split is a written speech to Mr N Nobilo, in which Mr S Nobilo states:
As a beneficiary I am not happy with your conduct as the trustee of the Nikola Nobilo Trust, with the way you have managed the trust for the family and I am not happy with the previously agreed proposed split of assets, namely the 40:30:30 split of the house sale price, the 33.3 split of Vinoptima and the forgiveness of your approximately $500K debt to the trust. Since the agreements were made, not long after Mum’s death, a great deal of information has come to light, which has made me reconsider my feelings on the split.
I feel you have mismanaged the Trust’s assets over the last few years…
[43] The speech is undated. Mr S Nobilo Jr deposes that his father read the letter to Mr N Nobilo at a meeting on 6 April 2016, also attended by himself and Ms V Nobilo.
[44] If this speech represents Mr S Nobilo withdrawing his consent to the Agreed Split, it occurred after the loan from Mr M Nobilo was agreed, and after the S Nobilo Family Trust ‘received’ the loan and applied it towards the FM Custodians debt.
[45] For all these reasons I find that the defence that the loan is not repayable because Mr S Nobilo withdrew his consent to the Agreed Split is not reasonably arguable.
Personal debt between Mr S Nobilo and Mr M Nobilo
[46] The S Nobilo Family Trust says in its notice of opposition that the loan was from Mr M Nobilo to Mr S Nobilo personally, not to the S Nobilo Family Trust.
[47] This defence is also inconsistent with the contemporaneous documents. The clear purpose of the advance was to enable the S Nobilo Family Trust to repay its portion of the loan from FM Custodian. The correspondence from Mr S Nobilo Jr and Ms Judd after the Haigh Lyon meeting confirms that the advance was to the S Nobilo Family Trust.
[48] I note also that the Trust’s former solicitors suggested that the advances were not a loan from Mr M Nobilo but were from the NNT. That is also wholly inconsistent with the contemporaneous records described.
Dispute between Mr S Nobilo and Mr N Nobilo regarding their shared liabilities
[49] It is not disputed by Mr M Nobilo that a dispute arose between Messrs S and N Nobilo about the allocation of interest on the FM Custodian loan between their trusts. It is evident from Ms Judd’s correspondence that Mr S Nobilo had several questions about Mr N Nobilo’s August 2015 loan summary and that these were still unresolved after settlement of the sale of the Homestead (29 February 2016).
[50] However, these questions, which developed into a dispute after settlement, are irrelevant to the S Nobilo Family Trust’s obligation to repay Mr M Nobilo the loan. The funds Mr M Nobilo loaned to the S Nobilo Family trust on settlement of the sale of the Homestead were based upon Mr N Nobilo’s loan summary – which also formed the basis of the Settlement Statement. The S Nobilo Family Trust agreed to the loan based on those calculations, accepted the funds on settlement date in that amount, and agreed to repay the advance.
Deed of variation not signed or agreed
[51] Mr M Nobilo has provided an unsigned copy of the Deed. It is unclear whether the Deed was ever signed by Mr N Nobilo as trustee and Messrs N and S Nobilo as beneficiaries.
[52] The status of this Deed as a document binding on the NNT is uncertain, even if it was signed. Messrs M and S Nobilo were not trustees of the NNT and as such could not make binding decisions regarding the NNT. Reflecting that, the Deed is framed as a ‘request’ by the three brothers as beneficiaries to the trustees of the NNT, at that time Mr N Nobilo.
[53] The more relevant point is that the three brothers agreed between themselves that the sale proceeds would be split according to the Agreed Split. They then proceeded to act on that agreement.
Uncertainty regarding final NNT asset distributions
[54] I take this to refer to the disagreement between Messrs N and S Nobilo about the FM Custodian loan allocation between them. This does not present a defence to Mr M Nobilo’s claim against the S Nobilo Family Trust for repayment of the loan, for the reasons I have already given.
Agreed Split could not proceed
[55] The S Nobilo Family Trust contends that Mr M Nobilo was aware that the Agreed Split could not proceed due to the absence of information, and subsequent dispute between himself, and Messrs N and S Nobilo.
[56] For the same reasons, this is not a reasonably arguable defence. Mr M Nobilo and Mr S Nobilo agreed to the loan based on the Agreed Split and Mr N Nobilo’s allocated share of the liabilities between his Trust and the S Nobilo Family Trust that formed the basis for the Settlement Statement. On settlement date, Mr M Nobilo’s funds were advanced to pay FM Custodians accordingly. The S Nobilo Family Trust agreed to the loan at that point in time, based on those calculations.
Result
[57]I am satisfied that the defendants do not have a defence to the plaintiff’s claim.
[58]Accordingly, I enter summary judgment for Mr M Nobilo for:
(a)the balance of the principal advanced, of $532,525.67;
(b)interest at five per cent on that sum, to 21 October 2022; and
(c)interest in accordance with s 10 of the Interest of Money Claims Act 2016, from 21 October 2022 until paid in full.
[59] I award Mr M Nobilo costs calculated on a 2B scale basis of $21,032 according to the Schedule to the plaintiff’s memorandum of counsel, with the hearing time increased to 0.5 of a day, together with Court fees of $3,000 and disbursements of
$20.80, a total of $24,052.80.
Associate Judge Gardiner
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