Northcott v Davidson - [2012] NZHC 1639

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2012-488-97 [2012] NZHC 1639

BETWEEN PETER JAMES NORTHCOTT AND JILL HEATHER NORTHCOTT
Plaintiffs

ANDBEAU FLETCHER DAVIDSON Defendant

Hearing: 1 May 2012

Appearances: M Singh for Plaintiffs
G Swanepoel for Defendant

Judgment: 7 June 2012

RESERVED JUDGMENT OF ASSOCIATE JUDGE BELL

This judgment was delivered by me on 7 June 2012 at ...4:30pm. pursuant to Rule 11.5 of the High Court Rules.

...................................
Registrar/Deputy Registrar

Solicitors:
Glaister Ennor (Mitch Singh) P O Box 63 Auckland 1140, for plaintiffs
Email: mitch.singh@glaisterennor.co.nz

SwanLaw (George Swanepoel) P O Box 1563 Whangarei 0140, for defendant
Email: George@swanlaw.co.nz

Case Officer:
Email: Paul.Lincoln@justice.govt.nz

NORTHCOTT AND NORTHCOTT V DAVIDSON HC WHA CIV-2012-488-97 [7 June 2012]

[1] The plaintiffs sue the defendant on a guarantee. The defendant opposes on the ground that any guarantee did not comply with s 27 of the Property Law Act
2007 because he did not sign. The plaintiffs have applied for summary judgment.

Facts

[2] In 2008 the plaintiffs made an investment of $500,000 through an investment broker, H D Finance Ltd. It has a nominee company for investments by contributory mortgages, H D Nominees Ltd. The defendant was a director of H D Finance Ltd and H D Nominees Ltd.

[3] Under normal lending by contributory mortgage, the broker arranges lending to a third party. But in this case, H D Nominees Ltd was the borrower. The security for the investment was said to be a first mortgage over land at 59 Watene Lane, Taupo, identifier 778310. No mortgage to protect the borrowers’ interest was registered. The plaintiffs initially invested the funds for 3 months but that was later extended. The interest rate payable was 15 per cent per annum but that was later reduced.

[4] The historical search copy of the register under the Land Transfer Act 1952 for identifier 778310 shows that Tui Grove Ltd became the registered proprietor in March 2007 and at the same time a mortgage in favour of H D Nominees Ltd was registered. The property was transferred to H D Nominees Ltd in May 2008 in the exercise of a power of sale. Mr Davidson explains that a contributory loan had been made to Tui Grove Ltd but it had defaulted. H D Nominees Ltd bought at a Registrar’s mortgagee sale. The plaintiffs’ investment of $500,000 helped finance the cost of buying the property. The property was in turn transferred to Watene Lane Ltd, an associated company, in September 2008. It was in turn transferred to third parties in September 2011. By that stage Watene Lane and H D Nominees Ltd had passed out of the defendant’s management and control. The plaintiffs have suffered losses of principal and interest.

[5] While Mr and Mrs Northcott’s investment was a loan to a company associated with a broker, the forms and procedures for contributory mortgage lending to a third party were followed. Their lending was recorded in a series of documents called “Instructions to Invest”. These…

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 1639
Decision Date: 7 June 2012

CaseChat Overview and Summary

The plaintiffs, Peter and Jill Northcott, sued the defendant, Beau Fletcher Davidson, for losses suffered on an investment in a contributory mortgage. The defendant opposed the claim on the ground that there was no enforceable guarantee because he did not sign the guarantee. The plaintiffs applied for summary judgment, which was dismissed. The court considered whether the defendant's signature was necessary for the guarantee to be enforceable. The court held that the signature was necessary and that the absence of the signature meant that the guarantee was not enforceable. The court also considered whether promissory estoppel could be used to enforce the guarantee notwithstanding the absence of a signature. The court held that promissory estoppel was not available to enforce the guarantee because it would have the effect of circumventing a statutory requirement. The court also held that the defendant had arguable defences to the claim.

Orders