Partners Finance Limited v Francis

[2024] NZHC 3562

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-002069

[2024] NZHC 3562

IN THE MATTER OF

An application to maintain a registration under the Personal Property Securities Act 1999 and in the matter of an application for an order for the release of property

BETWEEN

PARTNERS FINANCE LIMITED

Plaintiff

AND

BENJAMIN BRYAN FRANCIS and GARRY WHIMP

Defendants

Hearing:	30 October 2024
Appearances:	D G Dewar for Plaintiff A Ho for Defendants
Judgment:	27 November 2024

JUDGMENT OF ANDREW J

This judgment was delivered by Justice Andrew on 27 November 2024 at 3.00 pm

pursuant to r 11.5 of the High Court Rules 2016 Registrar / Deputy Registrar

Date ……………………..

PARTNERS FINANCE LTD v FRANCIS [2024] NZHC 3562 [27 November 2024]

Introduction

[1]    These proceedings relate to a loan by the plaintiff to the company Mount Civil Limited (MCL) in the amount of $152,950 in April 2022. It was for the purposes of funding the purchase of a Hitachi excavator and its parts. It was made under a standard loan and security agreement, with security over the excavator.

[2]    Upon liquidation of MCL, the liquidator has identified that when the company executed the loan and security agreement and returned it to the plaintiff, a page was missing from the security document. The director of MCL has disposed that this was an oversight in the scanning. He believes that he executed the document correctly, including the missing page.

[3]In the substantive proceedings, the plaintiff seeks the following:

(a)An order making permanent the interim order of Tahana J of 23 August 2024, maintaining financing statement number FV75UF9DBG2X6678 as a registered security – s 167 of the Personal Property Securities Act 1999 (PPSA);

(b)A declaration that the PPSA registration and the loan and security agreement are valid and binding; and

(c)An order seeking the mandatory return of the goods.

[4]    In the present interlocutory application, the plaintiff seeks leave to bring the proceedings by way of originating application. The Court has already granted leave in relation to the PPSA registration (i.e. making permanent the order of Tahana J) but the dispute remains in relation to the two further orders sought.

Relevant legal principles

[5]    Rule 19.2(q) of the High Court Rules 2016 requires an application to sustain a financing statement under s 167 of the Personal Property Securities Act 1999 to be brought by way of originating application.

[6]    Rule 19.5 allows the Court to permit a proceeding to be commenced by way of originating application if it is in the interests of justice and not mentioned in rr 19.2 to

19.4 (proceedings that must be commenced by way of originating application).

[7]    The interests of justice mean that the Court must secure the just, speedy and inexpensive determination of the proceeding  in  considering an application  under    r 19.5.1

Analysis and decision

[8]    Much of the opposition by the liquidators to the plaintiff’s application (i.e. to bringing the balance of its claims by way of originating application) appears to be based on the misunderstanding that the plaintiff is suing in conversion. However, as Mr Dewar made clear, the plaintiff is not advancing a conversion cause of action in these proceedings.2 The orders sought are confined to a declaration and an order that the excavator be returned. Mr Dewar also expressly disavowed any suggestion that the plaintiff was bringing a claim for rectification.

[9]    The issues in these proceedings are narrow and should be capable of prompt resolution. The facts are largely not in dispute and do not appear to be capable of serious dispute. It seems unlikely that detailed pleadings or interlocutory orders will be required. I find that it is very much in the interests of justice to grant the application for leave to bring all claims by way of originating application. That is clearly consistent with the just, speed, and expeditious resolution of all outstanding issues.

[10]   I accordingly grant the application for leave to commence all of the claims by way of originating application.

[11]   I decline to make the substantive orders sought, as Mr Dewar urged me to do. The sole matter before me is simply the leave application.

1      Solar Bright Ltd v Martin [2019] NZHC 300 at [26]; Siemer v Attorney-General [2022] NZCA 200 at [2], (footnote omitted).

2      The plaintiff is not yet in a position to know whether it has yet sustained any loss. If the plaintiff is successful and the goods are returned and then sold there may, in fact, be no loss. In any event, the plaintiff accepts that if there were to be a claim for conversion, that would require a fresh and separate proceeding.

[12]   I do, however, acknowledge that on the face of the material before me, the plaintiff does appear to have a strong claim and it is difficult to see that the defendants or any other party might be able successfully to defend them. As Mr Dewar submitted, the scheme of Part 16 of the Companies Act 1993 is to exclude from the ambit of the liquidation, property which is subject to a charge. The Court in Dunphy v Sleepyhead Manufacturing Co Ltd notes that the Companies Act “contemplates that secured creditors will operate independently of the liquidation, unless they decide to surrender their security in terms of s 305(1)(c).”3

[13]   The liquidators have referred in their submissions to the interests of Bizcap who is said to hold a general security agreement and wishes to be heard in the substantive proceedings. However, that submission seems to be premised on the erroneous assumption that the plaintiff is bringing a claim in conversion.

Result

[14]   I grant the application that the plaintiff may bring all three of its claims by way of originating application.

[15]   As to costs, the plaintiff having succeeded, I find that the defendants should pay costs to the plaintiff on a 2B basis plus disbursements.

Andrew J

3      Dunphy v Sleepyhead Manufacturing Co Ltd [2007] NZCA 241, [2007] 3 NZLR 602 at [43].