Potter v Duffy - [2016] NZHC 1866

NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE
THE-FAMILY-COURT/LEGISLATION/RESTRICTION-ON-PUBLISHING- JUDGMENTS.

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2014-470-131 [2016] NZHC 1866

BETWEEN
TERI ANNE POTTER

Plaintiff

AND

MARK FRANCIS DUFFY First Defendant

THE TRUSTEES OF THE DUFFY TRUST - BEING TERI ANNE POTTER, MARK FRANCIS DUFFY AND LE PINE TRUSTEES LIMITED

Second Defendants

Hearing: On the papers

Counsel:

E Eggleston for the Plaintiff
V M Ammundsen for the First Defendant
T Young and T Kirkham for the 3rd named Second Defendant

Judgment:

11 August 2016

JUDGMENT (NO.4) OF MUIR J (RECALL)

This judgment was delivered by me on Thursday 11 August 2016 at 4.00 pm
Pursuant to Rule 11.5 of the High court Rules.
Registrar/Deputy Registrar
Date:…………………………

Counsel: Solicitors:
E Eggleston, Barrister, Tauranga V M Ammundsen, Trust Law Ltd, Auckland
Holland Beckett Lawyers, Tauranga
Le Pine & Co (T Young/T Kirkham), Taupo for the
Trustees

Copy to: The First Defendant

POTTER v DUFFY (No 4) (Recall) [2016] NZHC 1866 [11 August 2016]

Introduction

[1] The plaintiff makes an application for partial recall of my judgment dated 27

November 2015 on the basis that, since delivery of that judgment (and in the context of sale of the Duffy Trust’s assets and payment of the Trust creditors which then occurred), new information has come to light which makes the declaration of the quantum of the first defendant’s current account debt in para [53](b)(ii) of my
judgment incorrect.1

[2] In particular, from the proceeds of sale of the Trust’s lifestyle property in Tauranga, ASB Bank deducted the sum of $27,289.76 for the repayment of what is acknowledged as a personal debt of the first defendant, but which had been guaranteed by the Trust and which I refer to as the “Lady Luck” loan.2

[3] Although the plaintiff had, in her capacity as a Trustee of the Trust, signed an unlimited guarantee of the debt on 10 August 2005, she had, by the date these proceedings came on for hearing in 2015, long forgotten about the contingent liability. Nor, since the loan stood in the first defendant’s name alone, was she able she says to obtain information about it from ASB even if she had asked.

[4] Moreover, in his most recent affidavit of assets and liabilities dated

19 October 2015 the first defendant disclosed the loan only to the extent of his global liability to the ASB Bank of $104,714 (stated in the affidavit to be secured over what was acknowledged as his separate property at National Park). There was nothing therefore in his affidavit to alert the plaintiff to the continuing liability of the Trust under its guarantee.

[5] The problem was compounded in a partial settlement of the parties’ claims reflected in a consent memorandum dated 20 November 2015. That memorandum recorded that, on settlement of the sale of the Trust property, the…

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.

Continue reading Potter v Duffy

Details

AGLC: Potter v Duffy [2016] NZHC 1866
Case: [2016] NZHC 1866
Decision Date: 11 August 2016

CaseChat Overview and Summary

The case of Potter v Duffy concerns the partial recall of a previous judgment made by Muir J on November 27, 2015. The plaintiff, Teri Anne Potter, sought recall based on new information that came to light regarding the quantum of the first defendant's current account debt. This information related to a personal debt of the first defendant, Mark Francis Duffy, which had been guaranteed by the Duffy Trust. The primary issue was whether the court should recall its previous judgment due to the failure of the first defendant to disclose the contingent liability of the Trust under its guarantee.

Muir J found that the first defendant did not demonstrate an adequate level of candour in relation to the undisclosed loan. The court referenced the obligations of full and frank disclosure in relationship property proceedings, as established in Clayton v Clayton. The court determined that the first defendant's failure to disclose the loan constituted a very special reason for recalling the judgment. The court concluded that the first defendant had a positive obligation to disclose the loan as a contingent liability of the Trust and that allowing him to benefit from his own wrong was not equitable.

In light of the above, Muir J recalled and amended the previous judgment to include the undisclosed debt within the first defendant's current account. The new total debt was set at $150,569.76, incorporating the agreed sum, additional interest, and the undisclosed Lady Luck loan. The plaintiff did not seek costs for the recall application, and none were awarded.

The court's reasoning and outcome underscore the importance of full and frank disclosure in relationship property disputes and the potential consequences of failing to meet these obligations. The decision serves as a reminder of the court's discretion to recall judgments in cases where justice requires it for very special reasons, particularly when the failure to disclose relevant information significantly impacts the fairness of the proceedings.

Orders