Simunovich v Federal Capital Limited

[2023] NZCA 603

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA390/2023
 [2023] NZCA 603

BETWEEN	PETER JOHN SIMUNOVICH Applicant
AND	FEDERAL CAPITAL LIMITED Respondent

Court:	Miller and Katz JJ
Counsel:	M J Tingey for Applicant R J Latton for Respondent
Judgment: (On the papers)	28 November 2023 at 2.00 pm

JUDGMENT OF THE COURT

AThe application for leave to appeal is declined.

BMr Simunovich must pay costs in this Court for a standard application on a band A basis.

____________________________________________________________________

REASONS OF THE COURT

(Given by Miller J)

1. This judgment responds to an application for leave to bring an appeal from an interlocutory judgment of the High Court in which Sussock AJ declined Mr Simunovich’s application for summary judgment on a guarantee which Federal Capital Ltd (FCL) has sued to enforce.[1]  The Associate Judge declined leave to appeal.[2] 

   [1]Federal Capital Ltd v Simunovich [2022] NZHC 2985 [High Court substantive judgment].

   [2]Federal Capital Ltd v Simunovich [2023] NZHC 1500 [High Court leave judgment].

2. The facts are complex.  We adopt the Associate Judge’s summary of them.[3] 

   [3]High Court substantive judgment, above n 1, at [19]–[50].

3. The claim concerns two loans made by FCL to Seafish Tasmania Ltd.  Mr Simunovich was a director and shareholder of Seafish. 

4. A company called FE Investments Ltd (FEI) had also lent money to Seafish.  Mr Simunovich guaranteed Seafish’s indebtedness to FEI. 

5. The question is whether documents signed by Mr Simunovich in relation to the loan from FEI to Seafish amounted to guarantees of the FCL loans to Seafish. 

6. Mr Simunovich says that he and FCL agreed separate guarantees would be executed but that was never done.  FCL says that an agreement called the Security Sharing Agreement (SSA) was signed instead and that document expressly allowed FCL recourse to his FEI guarantee as security for the FCL loans.  Mr Simunovich signed the SSA.  He says it was not, and was never intended to be, a guarantee. 

7. The Associate Judge held that:[4]

   [82]     The interpretation of the SSA is by no means straight forward.  But as this is an application for strike out or summary judgment, the question is whether it is reasonably arguable that Mr Simunovich signed a contract of guarantee.  The key point in my view is that the landscape of agreements and the SSA itself are significantly more complex than in Brougham and it appears to be reasonably arguable that there is a written contract of guarantee.  As Katz J observed in Ferrer-Aza v Nzone Race Management Ltd:

   ... it is well established that factual matrix evidence is relevant (indeed sometimes critically so) to the contractual interpretation exercise.  As a result, questions of contractual interpretation may not be able to be adequately addressed in a summary judgment context, particularly where there is either insufficient contextual evidence before the Court, or it is necessary to resolve disputes regarding the matrix of fact.

   [4]Footnote omitted.

8. We agree with the Associate Judge that it is at least arguable that the Security Sharing Agreement (SSA) does incorporate the FEI guarantee and this is a case in which the full factual context may inform interpretation of the Security Sharing Agreement.  There is clearly room for debate about the meaning of its terms, and meaning is almost certain to be informed by context.  It is not appropriate at this juncture to decide whether any given item of extrinsic evidence is inadmissible.  We see no error in the Associate Judge’s approach.  In the event that FCL secures judgment at trial, an appeal will lie to this Court as of right.[5] 

   [5]Senior Courts Act 2016, s 56(1)(a).

9. Since the High Court decision, FCL has amended its pleading to seek, in the alternative, specific performance of a promise to guarantee the FCL loans.  We do not accept that we can exclude that claim at this stage on the ground that, as Mr Simunovich contends, there was never a legally enforceable promise to execute a guarantee.  That being so, there is a procedural obstacle to the grant of summary judgment, which on a defendant’s application must encompass the entire claim.[6]

   [6]High Court Rules 2016, r 12.2(2).  See also Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at HR12.2.10.

10. Mr Simunovich has also sought leave to appeal the Associate Judge’s decision declining to order that FCL pay security for costs.  We see no error in this decision.

11. The application for leave to appeal is declined.  Mr Simunovich must pay costs in this Court for a standard application on a band A basis.

Solicitors:
Fee Langstone, Auckland for Applicant
Leigh Judd Law, Auckland for Respondent