Roskill Nominees Limited v Cunningham - [2022] NZHC 160

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1072

[2022] NZHC 160

BETWEEN
ROSKILL NOMINEES LIMITED

Plaintiff

AND

BRUCE STEWART CUNNINGHAM

Defendant

Hearing: 8 February 2022

Counsel:

G M Bogiatto for Plaintiff P M Hoskins for Defendant

Judgment:

11 February 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

ROSKILL NOMINEES LIMITED v CUNNINGHAM [2022] NZHC 160 [11 February 2022]

[1] The defendant, Bruce Stewart Cunningham (Mr Cunningham), applies for security for costs.

[2] I have the benefit of Associate Judge Gardiner’s decision in an earlier application between the parties where the Judge sets out the background facts and I gratefully adopt her summary which I set out below.1
[1] In 2010 Mr Cunningham was facing financial difficulties and, potentially, a mortgagee sale of his home. He agreed that Roskill Nominees Limited (Roskill) would buy his property and hold it on trust for him for three months. He would then re-purchase it. Roskill and its owner, Clive Ashley Johnson (Mr Johnson) say that Mr Cunningham agreed to pay rental and reimburse Roskill for all costs and expenses it incurred in relation to the property. The property was not re-purchased by Mr Cunningham at the end of three months, with both parties blaming each other for this failure. Eventually, in 2018, Roskill sold the property to Mr Cunningham’s sons.

[2] Roskill brought proceedings against Mr Cunningham, claiming unpaid rental of $213,782 and expenses of $226,135.93. This is proceeding CIV-2019-404-1072 (the 1072 proceeding). Mr Cunningham issued proceedings against Roskill and Mr Johnson demanding that they account for their dealings with the property, and claiming losses arising out of their breach of fiduciary duties. This is proceeding CIV-2019-404-2553 (the 2553 proceeding). The proceedings are being case managed together.

…

Facts

[5] Roskill is an incorporated company. Mr Johnson, an accountant, is sole owner, and has largely been sole director, of the company since July 2010. Mr Johnson has also, at all material times, been a director and shareholder of Johnson Nominees (No 7) Ltd (Johnson).

[6] Mr Cunningham is a retired beneficiary, residing at a Te Atatu property (the Te Atatu Property). Until 24 August 2010, Mr Cunningham was the registered owner of the Te Atatu Property, subject to a mortgage to Bridging Finance Ltd (BFL) and two caveats.

[7] In 2010, BFL began to take steps to exercise its mortgagee remedies against the Te Atatu Property by way of sale, as Mr Cunningham was in default of his mortgage obligations.

[8] To forestall BFL’s exercise of its power of sale, Mr Cunningham entered into an updated agreement with Roskill around July 2010 (the Te Atatu Agreement). Roskill agreed to purchase the Te Atatu Property from

1 Roskill Nominees Ltd v Cunningham [2021] NZHC 303.

Mr Cunningham for $650,000, and to lease it to Mr Cunningham and his two sons for $890 per week. The parties disagree as to whether payments of rent were to…

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 Roskill Nominees Limited v Cunningham

Details

AGLC: Roskill Nominees Limited v Cunningham [2022] NZHC 160
Case: [2022] NZHC 160
Decision Date: 11 February 2022

CaseChat Overview and Summary

Roskill Nominees Limited, a company owned by Clive Ashley Johnson, brought proceedings against Bruce Stewart Cunningham, claiming unpaid rental and expenses related to the property. Cunningham, who was facing financial difficulties, had entered into an agreement with Roskill in 2010, whereby Roskill would purchase his property, hold it on trust for him, and Cunningham would re-purchase it after three months. However, Cunningham did not re-purchase the property, leading to the current dispute. Cunningham, in turn, filed proceedings against Roskill and Johnson, claiming losses arising out of their breach of fiduciary duties. In this case, Cunningham applied for security for costs, arguing that Roskill was impecunious and unable to pay the costs if the application was unsuccessful. The court had to determine whether the threshold for ordering security was met, the merits of Roskill's claim, the extent to which Cunningham's impecuniosity resulted from his actions, and whether any delay caused unfairness to Cunningham.

The court found that the threshold for ordering security was met as Roskill had net liabilities of approximately $400,000 in 2019 and relied on shareholder funding. The merits of Roskill's claim appeared strong, as Cunningham had not paid rent or met the property's outgoings since mid-2010. Furthermore, Cunningham's failure to pay rent deprived Roskill of around $126,000, which weighed against ordering security. The court considered the delay in the case as neutral, as Cunningham was aware that Roskill was incorporated for the purpose of being a trustee and that he had not paid any rent. Ultimately, the court declined to order security for costs as it found that it was not "just in all the circumstances." The court also made no order as to costs, as Cunningham was legally aided.

Orders