Olliver v Mulholland - [2013] NZHC 3334

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-004285 [2013] NZHC 3334

BETWEEN
ANDREW JOHN OLLIVER

TINA ANNE MARIA OLLIVER Appellants

AND

WILLIAM FREDERICK MULHOLLAND Respondent

Hearing: 5 December 2013

Appearances:

P J Kennelly for the Appellants
S H Barter for the Respondent

Judgment:

12 December 2013

JUDGMENT OF GILBERT J

This judgment is delivered by me on 12 December 2013 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules.

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

Date: …………………..

OLLIVER v MULHOLLAND [2013] NZHC 3334 [12 December 2013]

Introduction

[1] Mr Olliver appeals against a decision of Judge B A Gibson in the District Court at North Shore entering judgment against him in favour of Mr Mulholland for $100,000 plus interest being the amount due under a signed loan agreement.1 The Judge rejected Mr Olliver’s defences of total failure of consideration and duress. Mr Mulholland cross-appeals against the interest award. Mr and Mrs Olliver also appeal against the Judge’s dismissal of their counterclaims
that Mr Mulholland is indebted to them under two share purchase option agreements allegedly exercised by Mr Mulholland in 2003.

[2] The dispute arises out of the parties’ participation as shareholders of various companies that were established to provide funds management, mortgage broking, and related financial services. Mr and Mrs Olliver incorporated the first of these companies, Midland Funds Management Limited (MFM), in March 2002 with the intention of managing funds on behalf of investors. Mr and Mrs Olliver each held
500 shares in MFM on incorporation.

[3] Mr Mulholland purchased 100 shares in MFM for $80,000 in July 2002 and at the same time entered into a share option agreement entitling him to purchase a further 100 shares at $1,000 per share at any time before 1 August 2003. In November 2002, Mr Mulholland purchased an additional 100 shares in MFM for
$80,000 and entered into a second share option agreement for another 100 shares at

$1,000 per share, exercisable before 4 November 2003.

[4] Other companies in the group were: Midland Services Limited (MSL), incorporated on 16 August 2002 as a service company to fund various payments for MFM; New Zealand Home Loans Albany Limited (NZHL), established on
20 January 2003 to provide home loans; and Midland Funds Management Nominees

Limited, formed on 10 November 2004 to act as a nominee company lender.

[5] The original intention was that a unit trust would be registered to enable

MFM to act as a fund manager for members of the public who wished to invest.

1 Mulholland v Olliver DC North Shore CIV-2009-044-001099 & CIV-2009-044-001688, 27 August
2013.

This did not occur and although significant resources were committed to it, MFM was not ultimately successful. MSL was not intended as a profit making venture, merely a service company. The only company in the group that did perform well was NZHL which earned a margin on mortgage lending funded by Sovereign Financial Services.

[6] The relationship between Mr Olliver and Mr Mulholland soured in late…

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: [2013] NZHC 3334
Decision Date: 12 December 2013

CaseChat Overview and Summary

In Olliver v Mulholland, Mr Olliver and his wife appeal against a decision of the District Court, which had entered judgment in favour of Mr Mulholland for $100,000 plus interest under a signed loan agreement. The Judge had rejected their defences of total failure of consideration and duress. Mr Mulholland cross-appeals against the interest award. The Ollivers also appeal against the dismissal of their counterclaims that Mr Mulholland is indebted to them under two share purchase option agreements allegedly exercised by Mr Mulholland in 2003.

The court found that Mr Mulholland did not exercise the share options, there was consideration for the loan agreement, the defence of duress was not available, and the interest provision in the loan agreement was void for uncertainty. The court dismissed the Ollivers' appeal and allowed Mr Mulholland's cross-appeal. The interest award made in the District Court was set aside and replaced with an order requiring Mr Olliver to pay interest to Mr Mulholland at the prescribed interest rate for fringe benefit tax, taking into account the payment of $2,500 made by Mr Olliver. If there was any disagreement as to the applicable rate or the calculation of the amount due, the parties were directed to file and serve memoranda accordingly.

In conclusion, the court dismissed Mr and Mrs Olliver’s appeal and allowed Mr Mulholland’s cross-appeal. The interest award made in the District Court was set aside and replaced with an order requiring Mr Olliver to pay interest to Mr Mulholland at the prescribed interest rate for fringe benefit tax, taking into account the payment of $2,500 made by Mr Olliver. If there was any disagreement as to the applicable rate or the calculation of the amount due, the parties were directed to file and serve memoranda accordingly.

Orders