Property Funding Limited v King
[2014] NZHC 2490
•6 October 2014
IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY
CIV-2014-476-000043 [2014] NZHC 2490
BETWEEN PROPERTY FUNDING LIMITED
Plaintiff
AND
JUDITH RUTH KING Defendant
Hearing: 6 October 2014 Appearances:
J Moss for Plaintiff
S R Carey for DefendantJudgment:
6 October 2014
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
on plaintiff's summary judgment application
Introduction
[1] The plaintiff, PFL, seeks summary judgment against the defendant, Mrs King, for stock and station firm debts incurred by Mrs King and her husband as farming partners up to December 2009. The debt as at 31 January 2010 stood at
$361,453.61 together with interest and solicitor/client costs on contractual terms. PFL’s status arises from debts which were owed to PGG Wrightson (PGG) with whom Mr and Mrs King had previously incurred debts. The debts were assigned to PLF. PFL’s rights to recover the debts from someone are not in dispute. What Mrs King disputes is the assertion that she remains a debtor.
Plaintiff ’s summary judgment – the principles
[2] Counsel have no differences as to the summary judgment principles to be applied and counsel simply set out my standard summary of the principles.
PROPERTY FUNDING LIMITED v KING [2014] NZHC 2490 [6 October 2014]
[3] The starting point for a plaintiff’s summary judgment application is r 12.2(1) High Court Rules, which requires that the plaintiff satisfy the Court that the defendant has no defence to any cause of action in the statement of claim or to a particular cause of action.
[4] I summarise the general principles which I adopt in relation to this application:
(a) Commonsense, flexibility and a sense of justice are required.1
(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.2
(c) The Court will not hesitate to decide questions of law where appropriate.3
(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements and affidavits.4
(e) In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other
statements, or inherently improbable.5
(f) In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation – the defendant is under an obligation to lay a proper foundation for the defence in the
affidavits filed in support of the Notice of Opposition.6
1 Haines v Carter [2001] 2 NZLR 167 (CA) at [97].
2 Pemberton v Chappell [1987] 1 NZLR 1 (CA).
3 European Asian Bank AG v Punjab & Sind Bank [1983] 2 All ER 508 (CA) at 516.
4 Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21.
5 Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 (HC).
6 Middleditch v NZ Hotel Investments Ltd (1992) 5 PRNZ 392 (CA).
(g)In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.7
(h)The need for judicial caution in summary judgment applications has to be balanced with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required for
the protection of the integrity of the summary judgment process.8
(i)Once the Court is satisfied that there is no defence, the Court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.9
The issue
[5] The single issue, although counsel’s submissions and the evidence invite me to consider it from a number of angles, is whether in a summary judgment context Mrs King was arguably released from liability by PGG, with Kingloch Farms Limited (Kingloch) a family company becoming the principal debtor with Mr King a guarantor or possibly still principal debtor.
The history
PFL’s attempts to recover the debt
[6] There is a complex subsequent sequence of events, aptly described by
Mr Moss as tortured, relating to the recovery of the debt involving –
(a) an initially successful summary judgment claim issued by PGG in
April 2011 against Mr and Mrs King;
7 Jowada Holdings Ltd v Cullen Investments Ltd CA248/02, 5 June 2003 at [28].
8 Bilbie Dymock Corporation Ltd v Patel & Bajaj (1987) 1 PRNZ 84 (CA).
9 Pemberton v Chappell, above n 2.
(b) charging orders against the land and personal property; (c) bankruptcy notices against Mr and Mrs King;
(d) an application to set aside the judgments; (e) an assignment of the debt by PGG to PFL;
(f) settlement between PFL and Mr King on the basis of a consent amended judgment; and
(g)a consent order setting aside the judgment against Mrs King and thereby leaving PFL free to pursue the now extant summary judgment application.
[7] Those developments explain the delay in relation to an old claim reaching this hearing but do not significantly affect the matters which must inform this judgment.
Chronology of the PGG debt and its assignment to PFL
September 2008 The Kings, then at Havelock, looking to purchase a new farm at Wakanui near Ashburton.
3 September 2009 PGG concern at the level of the Kings’ debt, ($361,587.48);
a meeting of PGG’s Mr Hanrahan and at least Mr King.
4 September 2009 PGG letter to the Kings seeking completion of a new account form, financial details, formalisation of security and a repayment proposal.
3 December 2009 Mr Hanrahan and Mr King meet at Wakanui.
9 December 2009 Mr King writes to PGG as to the Kings’ position and attaches the completed form.
11 December 2009 PGG changes the account name to Kingloch.
December 2009 to
April 2011 Kingloch and the Kings make no payments to PGG.
January to
October 2010 PGG’s invoices addressed to Kingloch.
7 February 2010 PGG registers financing statements on the Personal Properties Security Register against assets of Kingloch and Mr King (not Mrs King).
15 February 2010 Kings’ first and only purchase after 9 December 2009.
28 May 2010 Written demand by PGG on Kingloch for $384,069.74 and on Mr King personally on a separate account. No demand on Mrs King.
4 June 2010 Statutory demand by PGG upon Kingloch for $384,069.74 (not met).
14 October 2010 Letter from PGG’s solicitors to ASB Bank, financier of
Wakanui farm stating “PGW is owed approximately
$420,000 by Kingloch Farm Limited”.
21 October 2010 Receivers appointed to Kingloch.
2011 PGG assigns its debt interest to PFL.
September/December 2009 – the documentary evidence
[8] What the contemporary documents show is:
(1) Mr and Mrs King were indebted to PGG for $361,587.48 in September
2009.
(2) Mr Hanrahan of PGG at the credit department’s urging arranged a
meeting on 3 September 2009 with at least Mr King.
(3)Mr Hanrahan on 4 September 2009 provided to Mr King a new account form, a statement of financial position and required the Kings to complete those and to provide a repayment plan and a proposal for security arrangements.
(4) Mr Hanrahan and Mr King met again on 3 December 2009.
(5) On 9 December 2009 Mr King returned to PGG the completed new account form having executed as a director for Kingloch as the account holder and having executed personally the guarantee provisions.
(5) On 11 December 2009 after PGW changed the name of the account to
“Kingloch”.
The name change form
[9] From the earliest point of the proceeding PFL’s witnesses made repeated references which emphasised a “name change” aspect of the 9 December 2009 completed form. For instance Daniel Howe, the PGG credit recovery specialist whose affidavit supported the application, said:
… I have been asked to comment on whether the application form which provided for a name change on account 241929 replaced or released Mr and Mrs King.
[10] I find the repeated use of the “name change” terminology unhelpful. The standard PGG form which Mr Hanrahan gave Mr King to complete is entitled “Application to Open a Monthly Charge Account” and seeks the identity and many details of the person wishing to become a customer. On the reverse of the document where Mr King personally signed as guarantor, PGG has also provided the following words which potentially involve a name change:
Is this application for a new account? Yes/No
or is this application for a name change to an existing account? Yes/No.
[11] Unsurprisingly, given that Kingloch was to become a customer but that account 241929 already existed, Mr King did not complete either question with a Yes or No. Regardless of any name change aspect of the transaction, it definitely
involved Kingloch becoming a customer, albeit in relation to an already established account.
Mrs King’s argued defence
Absence of a written contract of novation
[12] Mrs King recognises that the parties did not execute a document of novation. Mr Carey for Mrs King submits that the absence of writing does not stand in the way of a successful case of novation.
[13] Mr Moss in his submissions acknowledges that the release of one party by novation may be evidenced both by writing and conduct. The legal position is as identified by the Supreme Court in Savvy Vineyards 3552 Ltd v Kakara Estate Ltd.10
Savvy Vineyards establishes that:
(1) as a novation is a new contract, a clause in the old contract to the effect
“no amendment but in writing” is not triggered by the novation; (2) parties are in any event entitled to vary an existing contract.
[14] PFL nevertheless relies on its terms of trade on invoices which were sent to
Mr and Mrs King on all their purchases through to 2009 which provided:
No Waiver: The Company shall be deemed not to have waived any right to do anything unless that waiver is in writing and signed by an authorised manager of the company.
[15] One of PFL’s witnesses, the PGG credit manager Mark Hanrahan, deposes that if Mrs King was to be released from liability he would have had to make a recommendation to PGG’s “credit department in Dunedin” who in turn would have had to provide release documentation. Mr Hanrahan added that he had never made
such a request for either the Kings or any other clients of PGG.
10 Savvy Vineyards 3552 Ltd v Kakara Estate Ltd [2014] NZSC 121 (SC).
[16] Mr Moss submits, on the basis of Mr Hanrahan’s evidence, that Mrs King’s release in this case is not arguable because a release would be a waiver not in writing or by the authorised manager.
[17] Given the authority of Savvy Vineyards that a non-waiver clause may not be a bar to an effective release of liability, the key issues in this case are evidential. Was there an apparent release of liability by an agreement reached expressly or by conduct and, if so, in this case did the PGG officers involved have the actual or apparent authority to give PGG’s release?
[18] I will return to the evidence which Mrs King relies on as to conduct evidencing agreement. To the extent the Court must examine the authority of Mr Hanrahan or others of PGG, the Court is ill-equipped in a summary judgment context to reliably find that it is beyond argument that Mr Hanrahan must have lacked the actual or apparent authority to bind PGG. The plaintiff produces no PGG documents to verify Mr Hanrahan’s evidence as to his authority. His evidence as to what his practice has been has not been tested at a trial and may or may not represent PGG’s invariable approach across all its offices. It is at least arguable that Mr Hanrahan may have been in a position in his dealings with PGG customers to bind PGG contractually.
Evidence as to PGG’s treatment of the Kings’ account – September/December 2009
[19] PGG operated credit accounts for customers including Mr and Mrs King.
[20] PGG gives evidence as to its concerns over the King’s account by late 2009:
(1) The Kings’ debt had reached $384,069.74;
(2)PGG’s credit department was concerned that the Kings’ debt was in significant arrears;
(3)the Kings had previously farmed at Havelock so their account was administered at Blenheim;
(4)with the Kings’ purchase of the Wakanui farm it was important to change account administration to Ashburton as the Kings’ company Kingloch would be the entity making future purchases;
(5) PGG wanted security for the outstanding debt;
(6) Mr Hanrahan had a meeting on 3 September 2009 with at least Mr King
to discuss PGG’s concerns and requirements;
(7) Mr Hanrahan then sent Mr and Mrs King its 9 December 2009 letter.
[21] In response Mr King returned the account form with Kingloch now entered as the customer with its GST number and other details. The space for partnership details was not completed but Mr and Mrs King were recorded as the company’s authorised directors. Mr King executed as guarantor the guarantee provisions. In his covering letter Mr King wrote of “our intention” to get the debt repaid in some detail.
[22] On 11 December 2014 a PGG finance support officer forwarded the
“application form” to another PGG officer saying:
Yes Mark [Hanrahan] would like to replace account 241929 with Kinglock (sic) Farms Ltd as attached (change of names for account). Attached is application form …
PGG then changed account 241929 from the name of Mr and Mrs King personally into the name of Kingloch.
Submission for PGG
[23] Mr Moss submits that this evidence completely fails to support the Kings’ proposition that there had been a novation with Kingloch stepping into liability for the debt, Mrs King dropping out, and Mr King remaining liable as guarantor.
[24] Mr Moss referred to PGG’s internal use of the concept of Kingloch
“replacing”11 the Kings as “sloppy” if anything, submitting:
11 In the PGG internal memorandum on 11 December 2011, above at [22].
At best, it might go so far as to indicate that Kingloch is liable going forward from the account name change (with Mr King as guarantor) but it goes no further than that.
[25] In these submissions Mr Moss drew heavily upon the reply affidavit of Mr Hanrahan who had deposed as to the administrative efficiency of PGG’s change in the account to Ashburton because of the Wakanui purchase. Mr Hanrahan had identified Kingloch as the entity that would be purchasing the goods “going forward”.
Submission for Mrs King: the additional evidence relied on
[26] Mr Carey for Mrs King invites the Court to conclude that the change in the account was not “mere administrative convenience” but at least arguably supports Mrs King’s case that a novation was agreed upon and implemented in late-2009.
[27] The Kings’ evidence establishes that while Kingloch was the owner of the farm at Wakanui, Mr King had been living there since 2008. As Mr Carey notes the evidence including that of PFL’s own witnesses, clearly indicates that the change initiated by Mr Hanrahan in late 2009 arose out of PGG’s realisation that the Kings personally were in financial trouble. By having Kingloch become liable for the already incurred debt (as well as any further purchases) PGG would obtain greater “security” for its debt. Security was expressly an aspect of the requirements Mr Hanrahan imposed in his 4 September 2009 letter. Mr Hanrahan’s evidence supports the construction of the arrangements whereby the nature of the parties’ liabilities was being changed or created with Kingloch becoming principal debtor and Mr King changing to guarantor. Describing the account application form received by PGG on
9 December 2009, Mr Hanrahan says:
It provides security from the company Kingloch for future purchases and Mr King guaranteed the account … It also provided additional security for the partnership debt that had accrued to that point and for which Mr and Mrs King were indicating that they were trying to pay down as quickly as they could.
[28] While the thrust of PFL’s arguments is that the late 2009 documents involved only a name change for administrative purposes, the documentary evidence and Mr Hanrahan’s narrative evidence point at least arguably to an understanding reached
whereby, in order to give PGG better security, Kingloch became principal debtor and
Mr King guarantor, and Mrs King dropped out.
[29] Mr King has given evidence of the discussions he had with Mr Hanrahan when the two met at the Wakanui farm on 9 December 2009. Mr King deposed:
20.On or about 9 December 2009, Mr Hanrahan came to the Wakanui farm and spoke to me about, mainly, the sum owed on account
241929.
21.Mr Hanrahan asked me to change that account over to Kingloch. He told me that by doing this, the debt to PGG would be transferred from the partnership to Kingloch, and that we could then try to refinance the whole of the Kingloch debt – owed both to PGG and to the ASB – at the same time. He told me that transferring the debt to Kingloch might help with refinancing.
22.I discussed this request with Mr Hanrahan, and I agreed to do as he asked. As director I signed a PGG credit account form for Kingloch Farms Limited, which is attached as “C”. My recollection is that Mr Hanrahan had brought the form with him to the farm, and gave it to me to complete. I spoke to Judy about Mr Hanrahan’s request. She was also willing to do as he asked.
23.The account remained as number 241929. I signed the account as sole guarantor.
24.The request and arrangements for the transfer of account 241929 from the partnership to Kingloch were made by PGG, at Mr Hanrahan’s instigation. Mr Hanrahan was, in my view, a straight-up man. He and I spoke about his request and what it would entail, and he was clear that what was proposed was that the debt to PGG under the existing credit account would be transferred to Kingloch. The way he explained it, the transfer would benefit both PGG and Kingloch, which is why I was willing to agree.
[30] Mrs King deposes to the discussions which her husband had with her immediately following that meeting. In summary, Mr King’s evidence is that Mr Hanrahan put a new contractual arrangement to him, whereby Kingloch would become the principal debtor. Mr King proceeded on that basis he says and offered himself as guarantor.
[31] Mr Hanrahan in his reply evidence did not refer specifically to the
3 September meeting mentioned in his 4 September letter. In response to Mr King’s
evidence as to the 3 December 2009 meeting Mr Hanrahan stated only that:
15. Mr King says that I made it “clear that was proposed that the debt to PGG under the existing credit account would be transferred to Kingloch”. That is wrong. I did not say this. I would not have said this because I had no authority to release the partnership (or either of Mr or Mrs King personally) from the debt that owed. I also cannot think of any situation where that has occurred in the past. There would be no justification or reason to do so.
(emphasis added)
[32] Mr Hanrahan is thus responding to the evidence in which Mr King deposes (at his paragraph 24) as to what was “clear” to him. Mr Hanrahan’s evidence does not directly respond to most of the allegations in paragraphs 21 and 22 of Mr King’s evidence.
[33] On the evidence it is at least arguable that a change of parties was proposed by Mr Hanrahan with Kingloch to become principal debtor, liable for both further and past debt. Such fits well with both the background of Mr Hanrahan’s requirements of the Kings, the documents such as they exist, and the evidence of Mr King as to the December 2009 meeting. No diary records of PGG have been produced and I infer that none have been located.
[34] The arguability of Mrs King’s position is reinforced by the evidence as to the events after December 2009, largely ignored by PFL in the case initially presented in its summary judgment application and to some extent glossed over by Mr Moss in his written synopsis. In particular, the following are consistent with the argument that the parties to the contract changed by agreement in December 2009:
(1) PGG statements on account 241929 from 31 December 2009 to
October 2010 were addressed to Kingloch;
(2)in January 2010 PGG registered a financing statement on the Personal Property Securities Register against the assets of Kingloch before Kingloch had made any further purchases;
(3)in May 2010 PGG’s solicitors made demands, including a statutory demand, upon Kingloch for the account 241929 debt, while making separate demand on Mr King personally on another account and no demand on Mrs King;
(4) in October 2010 PGG’s solicitors advised ASB’s solicitors that it was
Kingloch which owed approximately $420,000.
[35] This pattern of conduct on the part of PGG, consistent to the point Kingloch was placed in receivership on 21 October 2010, accords with the new regime of the parties now involved with account 241929 as contended for by Mrs King.
[36] On 3 March 2011 PGG’s solicitors made demand upon Mr King for payment of the debt, now $434,039.78. The demand contained this explanation:
Demand is being made upon you personally and in accordance with clause
11.1 of the Terms of Sale of the Monthly Charge Account (copy enclosed). In the alternative, demand is made upon you as guarantor of Kingloch Farm Limited’s obligations to PGW and in accordance with clause 15.2 of the Terms of Trade attached to the Monthly Charge Account application form of Kingloch Farms Limited, dated 9 December 2009 (copy enclosed).
[37] The “alternative” explanations of Mr King’s liability – as principal debtor or guarantor of Kingloch’s debt – point to Mr King, by reason of the December 2009 agreements, having become a guarantor of the debt for which Kingloch had assumed a principal liability. (A similar letter sent to Mrs King at the same time, albeit without the “alternatives” explanation, demanded payment of the debt).
[38] In the event PGG issued a summary judgment application against both Mr and Mrs King in March 2014. When served, both Mr and Mrs King signed and sent on 4 April 2011 to PGG and its lawyers, and copied to the High Court, a letter which included the following:
We do not intend to not pay our debts as they fall due …
… we are currently in the process of reorganising our entire financial portfolio …
… it is out intent to pay and satisfy your debts without the need for
litigation.
[39] Of all the post-December 2009 correspondence, Mr Moss places greatest evidential reliance on this letter. He submits that if Mrs King had thought she was released then she would not have written and signed the 4 April 2011 letter.
Mr Moss submits that the letter is irreconcilable with Mrs King’s belief that she had
been released from personal liability.
[40] I do not find the April 2011 letter to be the unequivocal admission of Mr King’s liability which Mr Moss submits. It is arguably the sort of letter one might expect a husband and wife, whose entire business structure was in financial peril, to write in order to obtain a grace period. The identification of “our debts” appears to be at least arguably a reference to the debts of either of them and not necessarily joint debts of both. The Kings’ statements must also be read in the context of all PGG’s 2010 accounting, demands and correspondence.
[41] Mrs King’s affidavit evidence largely respected the limits of evidence which she can give as to the intentions behind the December 2009 re-arrangements. (In this regard it may be contrasted to many passages in the evidence of PFL’s witnesses which give subjective intention evidence or views of the correct construction of contractual arrangements which are clearly inadmissible. I therefore disregard those passages in my assessment of the evidence).
[42] Mrs King’s evidence recognises that her case depends to a significant extent on the discussions which, on her case, were conducted between her husband and Mr Hanrahan. She provides a degree of admissible corroboration as to her husband’s dealings with Mr Hanrahan in the form of her evidence as to the discussions which she had with her husband immediately following the 3 December 2009 meeting. She also explains her signing of the 4 April 2011 letter on the basis the Kings felt because she had been joined as a party to PGG’s proceedings, any response ought to refer to both of them.
[43] I am unable to conclude that Mrs King’s execution of the 4 April 2011 letter, or indeed her later conduct when faced with execution of a summary judgment, serves to establish clearly a liability on her part which is not so established, and indeed is arguably contradicted by other evidence. To the extent her lack of response might be taken as indicating a possible acceptance of liability, it is at least arguably contradicted by the evidence of the events of September-October 2009 and PGG’s own documents.
Mr King’s reliability
[44] Mr Moss submitted that Mrs King’s case is undermined by her reliance on Mr King’s evidence. Mr King’s evidence, Mr Moss submitted, is fundamentally unreliable. Mr Moss suggested that Mr King either misunderstood the effect of the “account name change” or had forgotten or is not telling the truth. Having reviewed the contemporary evidence as I have, this is not one of those cases in which the Court, on a summary judgment application, is able to dismiss a witness’s evidence as wholly implausible, let alone based on falsehood. To the extent that Mr Moss invited the alternative conclusion that Mr King had misunderstood the “name change”, the submission incorrectly focuses on Mr King’s subjective intention and understanding of the December 2009 arrangements. What matters is what was recorded or what was said between Mr Hanrahan and Mr King (in this context to be assessed at an arguable level).
[45] I cannot attach conclusive weight, for this reason, to findings made in the High Court trial in other proceedings involving PFL and Mr King,12 in which Peters J rejected Mr King’s evidence and preferred that of PFL’s witnesses in all material matters.13 There was a finding that Mr King was not a credible witness. In relation to one transaction Mr King’s evidence was not accepted, it being found that what was involved was a sham transaction. Both those findings reflect poorly on Mr King and are likely to greatly affect his credibility as it falls for assessment. It is clear from her Honour’s findings, however, that PFL’s narrative evidence in that case was strongly supported by the contemporary documents and was also reinforced by probabilities.14 Her judgment was also being given following a trial of evidence.
[46] Mrs King’s case in response to the present summary judgment application has support from the context of the December arrangements and by PGG’s own
documents.
12 King v Property Funding Ltd [2014] NZHC 250.
13 At [70] fn 3 at [62].
14 See for instance at [89].
Mrs King’s acceptance of the contract of novation
[47] In his oral submissions Mr Moss developed an argument as to incomplete novation which had not been covered in his synopsis. He submitted that the Court should also rule out Mrs King’s novation argument on the ground that there was nothing from Mrs King in writing or conduct to evidence her acceptance of the novation on which she relies.
[48] Mr Moss relied on a passage in Chitty on Contracts, adopted by the Court of Appeal in Hela Pharma AB v Hela Pharma Australasia Ltd.15 The authors of Chitty recognised the requirement that the contracting parties, which in this case include Mrs King, must all consent to the transfer involved in a novation:16
Novation. There is no doubt that with the consent of both contracting parties all contracts of any kind may be transferred, and the term “novation” has been introduced from Roman law to describe this species of transfer. Novation takes place where the two contracting parties agree that a third, who also agrees, shall stand in relation of either of them to the other. There is a new contract and it is therefore essential that the consent of all parties be obtained: in this necessity for consent lies the most important difference between novation and assignment.
[49] Mr Moss noted the lack of direct dealings between PGG and Mrs King. He submitted that Mrs King cannot point to evidence of her consent to the novation as required by the authorities.
[50] In this summary judgment context this submission must also fail. One analysis of the December arrangements is that Mr Hanrahan was inviting from the Kings, through Mr King, a proposal which would now include Kingloch as a liable party, and was expecting a response from both the Kings.
[51] It is the evidence of Mr and Mrs King, both, that the two of them discussed the PGG request, with Mrs King agreeing to Mr King’s proposed course of action. The actions involved the covering letter which Mr King wrote (with authority) on
Mrs King’s evidence on behalf of both of them and the provision of PGG’s “name
15 Hela Pharma AB v Hela Pharma Australasia Ltd CA165/03; CA206/03 17 February 2005, per
Hammond J delivering the Court’s decision at [56].
16 Chitty on Contracts General Principles (29th ed) Vol 1 (2012) at 19-085; recent edition: 31st ed
Vol 1 at 19-086.
change” form identifying Kingloch as principal party, bringing Mr King in as guarantor and omitting Mrs King. Mrs King’s agreement to that proposal (for novation) is at least arguable.
[52] Following this analysis through, PGG was then free to accept or reject the proposal contained in Mr King’s letter. As I have found, it is arguable that it did so. Having made the necessary decisions internally, PGG changed the account from an account of Mr and Mrs King to an account of Kingloch. This must have occurred around 11 December 2009 when internal emails were exchanged as to “replacing account 241929 with Kinglock (sic) Farms Ltd”. PGG then, at least arguably, communicated acceptance of the new arrangements, as already internally documented, by sending its accounts “c/o TF & JR King” but addressed specifically to Kingloch Farms Limited. PGG arguably further communicated its acceptance by registering in the public register the securities provided only by Kingloch and Mr King, a registration which could occur as a matter of contractual right only if PGG had accepted the Kings’ contractual offer.
Conclusion
[53] The key issue on this application is whether PGG, the Kings and Kingloch
arguably entered into a novation of the Kings’ existing credit arrangements.
[54] To find for PFL I would need to be satisfied that Mrs King has no defence to the claim that she was released. I am not satisfied that PFL can establish the threshold for summary judgment for the reasons I have given.
[55] Costs on a case such as this have to be reserved in accordance with the judgment of the Court of Appeal in NZI Bank Ltd v Philpott.17
Orders
[56] I order:
(1) The summary judgment application is dismissed.
17 NZI Bank Ltd v Philpott [1990] 2 NZLR 403.
(2) Costs are reserved.
Case management
[57] The proceeding will now require timetabling. Mrs King has yet to file a statement of defence. The timetable for that should take into account whether PFL, in due course, exercises its right of appeal from this judgment.
Timetable order
[58] I direct:
(1)The defendant shall file and serve her statement of defence and provide any additional documents required by way of initial disclosure within
10 working days after the earlier of:
(a) the expiry of the period for appeal from this judgment; or
(b) the date on which the plaintiff’s solicitors advise the defendant’s
solicitors in writing that an appeal is not being pursued.
(2)The Deputy Registrar, upon the filing of any defence, is to allocate a first case management conference under r 7.3(2) High Court Rules.
(3)Counsel shall immediately upon the filing of any defence confer as to the arrangements for any remaining requirements of discovery, having particular regard to the extent of disclosure which has already occurred and as to any other interlocutory requirements.
[59] Counsel and the parties are to anticipate that the Court will allocate a trial date at the first conference.
Associate Judge Osborne
Solicitors:
S Carey, Barrister, Auckland
J Moss, Barrister, Christchurch
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