Small (2005) Limited v Mahon - [2024] NZHC 3251

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2333

[2024] NZHC 3251

BETWEEN
SMALL (2005) LIMITED

Plaintiff

AND

NEVILLE CHRISTOPHER MAHON

Defendant

Hearing: 29 July 2024 to 8 August 2024

Appearances:

D Chisholm KC and M Lenihan for Plaintiff A Barker KC and R B Hucker for Defendant

Judgment:

5 November 2024

JUDGMENT OF WILKINSON-SMITH J

This judgment was delivered by me on 05/11/2024 at 3 pm.
Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Solicitors:/Counsel: Brown Partners, Auckland D Chisholm, Auckland Molloy Hucker, Auckland A Barker, Auckland

SMALL (2005) LIMITED v MAHON [2024] NZHC 3251 [5 November 2024]

Introduction [1]

Background [9]

The first tender [24]

CGL’s efforts to refinance [43]

The second tender [49]

Pleadings [59]

Issues [81]

Was the sale in breach of s 176(1) of the PLA? [82]

The Empire tender [106]

The CPL tender [110]

The sale to GB Ltd [121]

Sale to self [127]

The equitable duty of good faith [131]

Conclusion on counterclaim [143]

The CCCFA [145]

Miscellaneous matters [155]

Appropriation of the $3 million loan [157]

Interest [161]

Result [170]

Costs [173]

Introduction

[1] This litigation involves another instalment in what can only be described as an ongoing saga of litigation involving Timothy Edney and Neville Mahon.

[2] In 2014, a company associated with Mr Edney, Small (2005) Ltd (Small), sold a property at 117 Coronation Road, Māngere Bridge (the property) to Coronation Gardens Ltd (CGL) for $11.6 million. The director of CGL was Saren Loo. Ms Loo’s husband is Mr Mahon.

[3] The purchase of the property was funded by vendor finance from Small. In addition to a loan of $11.6 million to fund the purchase of the property, a separate
$3 million liability was added. This related to previous dealings between Mr Mahon and Mr Edney. Mr Mahon signed a guarantee in respect of the $11.6 million loan facility but not in respect of the additional $3 million. The $11.6 million loan from Small was to be repaid in two tranches, with $3 million due to be repaid in March 2016 and the balance in September 2017.

[4] CGL intended to develop the property into 120 terraced houses with the first stage of the development funded by a separate BNZ facility. CGL’s development of the property failed with the first mortgagee, BNZ, serving a Property Law Act 2007 (PLA) Notice in May 2017. BNZ subsequently assigned its rights under its securities to Small. Small exercised its right as mortgagee to sell the property to recover the debt. On 28 September 2018, CGL was liquidated on the application of the IRD for unpaid GST. The liquidator assigned CGL’s rights to another company associated with Mr Edney, The Golden Belt Mining Co Ltd (GB Ltd).

[5]The mortgagee sale process resulted in the property being sold to GB Ltd for

$11.75 million.

[6] Small says that this resulted in a loss which it seeks to recover under the guarantee…

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 Small (2005) Limited v Mahon

Details

AGLC: Small (2005) Limited v Mahon [2024] NZHC 3251
Case: [2024] NZHC 3251
Decision Date: 5 November 2024

CaseChat Overview and Summary

Small (2005) Limited (Small) sought judgment against Neville Christopher Mahon (Mahon) for monies owed under a guarantee. Mahon counterclaimed that Small had breached its statutory and equitable duties in exercising its power of sale, breached an equitable duty of good faith, and failed to register as a financial service provider under the Credit Contracts and Consumer Finance Act 2003 (CCCFA). Small claimed $6,518,491.20 plus interest. The court found that Small had not breached its statutory or equitable duties in exercising its power of sale. The court found that Small was not required to register as a financial services provider under the CCCFA. The court gave judgment to Small for $6,518,491.20 plus interest in accordance with the loan agreement and dismissed the counterclaim.

Orders