Oaklane Dairy Ltd v Flooks - [2023] NZHC 1852

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2023-419-000013

[2023] NZHC 1852

UNDER Part 19 of the High Court Rules 2016 and under section 109 of the Property Law Act 2007

BETWEEN

OAKLANE DAIRY LIMITED

Applicant

AND

KATHRYN LYNETTE FLOOKS, TRACEY MAY FLOOKS, MANDY LEE ROHRLACH,

TREVOR EDGARD FLOOKS and BARRIE WAYNE PRICE

as Administrators in the Estate of KEVIN STANLEY FLOOKS

First Respondent

TRACEY MAY FLOOKS

Second Respondent

Hearing: 21 June 2023

Appearances:

A A Low and L W Dixon for Applicant

A M Cameron for Second-named First Respondent and Second Respondent

G H J Brant and A K H McManus for First-named First Respondent

Judgment:

17 July 2023

JUDGMENT OF EDWARDS J

This judgment was delivered by me on 17 July 2023 at 4.00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

OAKLANE DAIRY LTD v FLOOKS, [2023] NZHC 1852 [17 July 2023]

[1] The applicant (Oaklane) is the registered proprietor of a property situated at Paeroa Kopu Road, RD 1, Thames (Farm). The Farm comprises six separate titles. Three of these titles have been sold but settlement is deferred pending resolution of this proceeding.

[2] Oaklane is the mortgagor under mortgage 7825636.5 (Mortgage) registered over the Farm. Kathryn (Kay) and Kevin Flooks are the mortgagees. The Mortgage secures a loan from Kay and Kevin Flooks as tenants in common in equal shares to Oaklane.

[3] Kevin Flooks passed away on 10 August 2020. The first respondents are administrators in his estate. Because of the family connection, I will refer to each party by their first name for ease of identification. I mean no disrespect in doing so.

[4] Oaklane says that all the sums owed to Kevin’s estate have now been repaid and that the estate’s share of the Mortgage should be discharged. The second respondent (Tracey) is the only one of the five appointed administrators who does not agree that the outstanding sums have been repaid. She and her sister, Debra Moodie, oppose Oaklane’s application.

[5] The dispute centres on whether there were oral variations to the loan interest rate made in 2015, 2017 and 2019 and whether an extension of the loan expiry date was agreed. Whether these variations were supported by consideration is also an issue in this case. Finally, if the loan and Mortgage were not validly varied, Oaklane relies on an estoppel to support its case.

Relevant facts

[6] The late Kevin Flooks and his wife Kay were farmers from Thames. Kay is now retired. Kevin and Kay have four children: Tracey Flooks; Mandy Rohrlach; Trevor Flooks; and Debra Moodie.

[7] In 2008, Trevor and his wife, Vanessa, agreed to purchase the Farm which was, by that time, owned by Oaklane. The purchase of the Farm was structured as a sale and purchase of shares in Oaklane for $6.770 million.

[8] The purchase price was funded by borrowing $3.3 million from Rabobank which was secured by a first ranking…

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: [2023] NZHC 1852
Decision Date: 17 July 2023

CaseChat Overview and Summary

Oaklane Dairy Limited, the registered proprietor of a farm in Thames, New Zealand, brought proceedings against the administrators of the estate of Kevin Flooks, one of the mortgagees, seeking a declaration that the estate's share of a mortgage over the farm had been repaid and that it should be discharged. The dispute centred on whether there were oral variations to the interest rate of the loan secured by the mortgage and whether an extension of the loan expiry date was agreed. The court had to determine if there were oral variations to the loan interest rate in 2015, 2017, and 2019, and if an extension of the loan expiry date was agreed upon. It also had to decide if these variations were supported by consideration. The court found that there were oral agreements to vary the interest rates in 2015, 2017, and 2019, and that the loan was extended, becoming repayable on demand. The court ruled that the practical benefit approach to consideration was sufficient to support the variations, and there was no need for fresh consideration. The estate's share of the mortgage had been repaid, and the court ordered that the administrators take steps to discharge the mortgage within five working days of the judgment. If they failed to do so, the court would direct the Registrar to execute the necessary documents to effect the discharge.

Orders