SPTC Limited v PJAFT Limited
[2018] NZHC 3139
•30 November 2018
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE
CIV 2018-441-9
[2018] NZHC 3139
BETWEEN SPTC LIMITED
First Plaintiff
AND
KAY ELIZABETH COOPER
Second Plaintiff
AND
PJAFT LIMITED
Defendant
Hearing: 8-10 August 2018 Counsel:
Second Plaintiff in person
S L Robertson QC for Defendant
Judgment:
30 November 2018
JUDGMENT OF ELLIS J
[1]On 13 March 2018 Churchman J granted ex parte orders:
(a)restraining the defendant (PJAFT) from selling a property owned by the first plaintiff (SPTC) at 17 Bell St, Clive, Hawke’s Bay (the Bell St property) under its power of sale as a second mortgagee; and
(b)restraining the defendant from exercising its rights against the first and second plaintiffs under an all obligations guarantee and indemnity.
[2] SPTC is the corporate trustee of the Folkstone Trust (the Trust), which was established for the benefit of the family of the second plaintiff Mrs Kay Cooper (who is the sole director of SPTC) and Mr Nigel Cooper. Until recently, the Bell St property has been the Coopers’ family home.
SPTC LTD v COOPER [2018] NZHC 3139 [30 November 2018]
[3] This judgment relates to the plaintiffs’ substantive claim, in which they seek to set aside PJAFT’s second mortgage over the Bell St property and the guarantees given to PJAFT by SPTC and Mrs Cooper. Essentially, they allege that Mrs Cooper (both personally and in her directorial capacity) was pressured to sign the relevant instruments by Mr Cooper and a third party, Mr Peter Sutherland, who is said to be PJAFT’s agent. It is also said that PJAFT failed to fulfil an alleged obligation to take steps to ensure “Mrs Cooper signed the documents free from influence or misrepresentation”.
Procedural matters
[4] Before turning to consider the factual and legal aspects of the claims in more detail, it is necessary to record certain unusual features of the hearing before me.
[5] The injunctions granted by Churchman J were, as I have said, granted ex parte and on the papers. At that time, the plaintiffs were represented by Mr John McDowell. Both Mrs and Mr Cooper filed affidavits in support of the application.
[6] On 24 July 2018 (just two weeks before the substantive hearing) Mr McDowell sought leave to withdraw as the plaintiffs’ counsel. After discussing the implications of that with both Mr McDowell and with Ms Robertson QC, I granted the leave sought.
[7] Subsequently, and upon further inquiry, Mrs Cooper confirmed that she wished the hearing to go ahead and that she would appear in person. It was agreed that the plaintiffs could adopt the affidavits sworn by Mrs and Mr Cooper in support of the injunction application as their briefs of evidence. Given the close alignment of interests between Mrs Cooper personally and SPTC, Ms Robertson did not object to Mrs Cooper also speaking (if she wished) on behalf of SPTC.
[8] At the hearing itself, however, it became clear that Mrs Cooper had little real interest in pursuing the claim which was, in reality, her ex-husband’s. My sense was that Mrs Cooper had no desire at all to be in Court and that she felt she had been thrust into a most unwelcome position against her will. And although I permitted Mrs Cooper to consult with Mr Cooper as to any questions she should ask of the
defendant’s witnesses or submissions she should make, she essentially declined to question the defendant’s witnesses and made no submissions.
[9] In a substantive sense, therefore, the hearing proceeded as if it were a reverse kind of formal proof. But it will immediately be appreciated that the prospect of the plaintiffs successfully proving their claims was small.
The evidence
[10] Unsurprisingly (in light of the background I have set out above) the factual/evidential high point of plaintiffs’ case was necessarily to be found in the affidavits sworn by Mr and Mrs Cooper in support of the application for the interim injunction. I shall turn to those shortly.
[11] By way of brief and uncontested background, however, Mrs and Mr Cooper were married in 2002. Mr Cooper is an orchardist of some 30 years standing. Through various corporate entities he sells and markets fruit.
[12] In June 2006, the Coopers decided to buy the Bell St property. The deposit was funded by Mr Cooper using money from his businesses. It was at that time that Mr Cooper arranged for his lawyer, Mr McAra, to settle the Trust. SPTC was nominated to complete the purchase of the Bell St property and to hold it for the purposes of the Trust.
[13] The Bell St property was used by the Coopers as their family home. It remains SPTC’s only asset. Mrs Cooper’s financial contributions primarily took the form of paying some of the family’s day to day living expenses.
[14] In May 2016 Mr Cooper incorporated Cooper Fresh Fruit Ltd (CFFL). In July 2016, he incorporated Cooper Produce Ltd (CPL). Mr Cooper is the sole director and shareholder of both companies.
The plaintiffs’ evidence
[15] In their affidavits sworn in support of the interim injunction application, Mrs and Mr Cooper set out their (notably consistent) accounts of what happened next.
By way of summary, they deposed:1
(a)Following a severe hailstorm in 2016, CFFL and CPL got into financial difficulty. The companies needed more funds to survive but the bank was not willing to assist.
(b)In mid-2017 Mr Cooper approached his good friend, Philip Alison for help. Through his company, PJAFT, Mr Alison agreed to lend CFFL and CPL $250,000. He inspected the orchards. Mr Cooper provided him with budgets and a statement of the companies’ financial positions.
(c)PJAFT required guarantees and security for this loan. This necessarily involved Mrs Cooper, notwithstanding that she had nothing to do with the running of her husband’s companies. She was at that time employed as a sales representative for Firenzo, selling fire places.2
(d)On 16 August 2017, Mr Sutherland came to the Coopers’ family home and, on PJAFT’s behalf, asked Mrs Cooper to sign a personal guarantee and security on the Bell St property for the loan. Mrs Cooper had not seen the loan documents, which were drafted by Russell McVeagh, before Mr Sutherland’s arrival.
(e)Mrs Cooper had no time to read the documents and was not advised, or given an opportunity, to take legal advice. No one explained the meaning of the documents to her. She did not read them. She believed the loan was for $40,000 and only later discovered it was for $250,000.
1 The summary is a (more or less) chronological amalgam of the two affidavits.
2 Mrs Cooper also deposed that she has no formal qualifications, no legal experience and “limited”
commercial ability.
(f)Mr Sutherland was forceful, insisting that the Coopers did not need to talk to lawyers because it was such “a good deal” and the matter was urgent. He demanded that the loan documents had to be “done” immediately.
(g)Mr Sutherland also wept during his visit, which (the Coopers suggest) was a sign of his “desperation” to get the documents signed because:
(i)he had not been in employment for about 10 years; and
(ii)under the loan agreement, PJAFT was to take a majority shareholding in Mr Cooper’s businesses and Mr Sutherland had been told he could work as Mr Cooper’s “boss” if the loan documents were signed.
(h)Mrs Cooper then signed the “all obligations guarantee and indemnity” deed and the mortgage and Mr Sutherland witnessed her signature.
(i)Mr Sutherland returned to Bell St the following day, saying that the Coopers had not initialled all the pages of the documents, which they then did.
(j)On Saturday 19 August 2017, Mr Sutherland arrived at Mrs Cooper’s
workplace, asking her to sign more documents which, again, she did.
(k)The following week Mr Sutherland telephoned Mrs Cooper and said that she and her son had to pay rent for the Bell St property to cover the mortgage. Mrs Cooper viewed this as “bullying”. She told him not to telephone her again.
(l)Mrs Cooper felt under considerable stress when she signed the documents. She was put under pressure by both her husband and Mr Sutherland.
(m)After the loan documents were signed, Mr Cooper attended meetings with Messrs Alison and Sutherland along with their accountants, who had prepared new budgets and updated the companies’ financial position.
(n)Mr Alison was angry because he said Mr Cooper had not disclosed all the companies’ liabilities. He said there were mistakes in the companies’ budgets and financial positions which Mr Cooper had provided to him.3 The friendship between Mr Alison and Mr Cooper ended at around this point.
(o)The resulting situation was very stressful, and caused Mr Cooper and his wife to separate.
(p)On 29 November 2017, Russell McVeagh sent a “restructuring proposal” to the Trust’s solicitor, Mr McAra. The proposal was that the Trust sell the Bell St property to PJAFT for $700,001, which was
$1 more than the first mortgage owing to ANZ.
(q)Mr McAra replied to the proposal saying that the property was held on trust and could not be sold at undervalue (the Trust had a registered valuation of $900,000). He also suggested that the proposal raised issues over the legality and ethics of using a threat of foreclosure to acquire trust property and that there was an issue as to the validity of PJAFT’s second mortgage.
(r)There was further correspondence between the lawyers in the course of which Russell McVeagh advised that PJAFT would sell the Bell St property by mortgagee sale and put Mr Coopers’ companies into receivership unless there was agreement to the restructuring proposal.
3 Mr Cooper said that he did not know about the outstanding tax owed and other creditors and that he did not deliberately misrepresent the financial position of the companies.
(s)On 30 November and 1 December 2017, Russell McVeagh sent letters of demand to Mr Cooper’s companies.
(t)Various deadlines for agreeing to the proposed restructuring were set but not met. Mrs Cooper/SPTC “refused to sell the Bell St property at undervalue” to PJAFT.
(u)On 30 January 2018, PJAFT put CFFL into receivership.
The evidential narrative as it emerged at the hearing
[16] A materially different narrative emerged at trial, however. Based on the evidence given by the defendant’s witnesses (Mr Alison, his Executive Assistant Ms Simone Bruwer and Mr Sutherland) together with the evidence given by Mr and Mrs Cooper under cross-examination, I am of the view that the following additional facts have been established.
[17] Mr Alison and Mr Cooper had been friends for over 30 years. Mr Alison has been in the fruit growing business producing, packing and exporting many types of fruit and vegetables for a similar period of time.
[18] Mr Cooper’s businesses had been under financial strain for some considerable time prior to PJAFT’s loan. In June 2010, another of his companies (Cooper Horticulture Ltd) was placed in receivership by creditors and it remained in receivership until 2013.4 At the time of the receivership, Mrs Cooper was working full time as the Administration Manager for the company. A joint business venture in which Mr Cooper was subsequently involved also ran into difficulties. Mr Alison provided Mr Cooper with some assistance at that time.
[19] Following the incorporation of CFFL and CPL, SPTC guaranteed and provided mortgage security over the Bell St property for three loans made to those companies by ANZ, as follows:
4 Other of the Cooper companies (Cooper Fresh Fruits (NZ) Ltd and Big Kahuna Fishing Charters Ltd) were removed from the Companies Office Register in this period.
(a)a loan to CFFL of $164,000 made on 19 May 2016;
(b)a loan to CFFL of $40,000 on 27 July 2016;
(c)a loan to CPL of $34,500 on 15 August 2016.
[20] Necessarily, and in every case, the guarantee and security documents were executed on SPTC’s behalf by its sole director, Mrs Cooper. The loans obtained by CFFL in May 2016 and by CPL in August 2016 were also guaranteed by both Mr and Mrs Cooper personally and the Trust. On both occasions their lawyer, Mr McAra, witnessed the Coopers’ signatures and signed the confirmation stating that he gave legal advice about the guarantees to the guarantors.
[21] It was about a year later that Mr Cooper first told Mr Alison that CFFL and CPL were in financial trouble. On 4 August 2017 Mr Cooper’s business consultant, Steve Goodman of Goodman Rural, got in touch with Mr Alison. Mr Goodman told Mr Alison that ANZ had refused to lend more than 80 per cent of the value of the Bell St property and that Mr Cooper needed more money for cropping. Mr Goodman told Mr Alison that the Bell St property was owned by SPTC and secured to ANZ. He asked if Mr Alison could lend around $70,000 secured by way of a second mortgage and GSA behind the ANZ. Mr Goodman provided a statement of financial position, which identified the Bell St property as an asset, and various proposed budgets. The annual accounts for the year ending 30 June 2017 did not show the companies’ many outstanding creditors.5
[22] On 8 August 2017 Mr Goodman provided Mr Alison with further financial documents including a handwritten summary signed by Mr Cooper detailing his creditors, debtors and stock on hand. It also included a summary of a registered valuation for the Bell St property dated 10 May 2017. An updated statement of position was provided on 9 August and further financial information (including an updated list of creditors) was provided at Mr Alison’s request on 11 August 2017.
5 Mr Cooper advised Mr Allison that these financial documents were the same as the accounts presented to the bank which had refused the loan.
The negotiation and signing of the loan documents and Mr Sutherland’s involvement
[23] The evidence of Messrs Alison and Sutherland and Ms Bruwer, corroborated by the documentary record, made it clear that the Coopers’ account of the negotiation of the loan, the execution of the relevant documents and Mr Sutherland’s involvement with them in relation to the loan was, in a number of respects, simply wrong. The facts established at trial are as follows.
[24] On 14 August 2017, there was a meeting between Mr Cooper, Mr Goodman, Mr Alison and his banker, Mr Sam Kelt. At Mr Alison’s behest, the meeting was recorded and subsequently transcribed. At the meeting Mr Alison pressed Messrs Cooper and Goodman on whether there were any more creditors not yet disclosed.
[25] Mr Alison told Mr Cooper that, subject to the receipt of more information about the businesses, he was willing to help by lending him $150,000 and other various small amounts. He advised that, in order to protect his own position, he would require:
(a)a 51 per cent shareholding in CFFL and CPL, subject to Mr Cooper being able to buy it back if and when repayment of the monies loaned plus interest had been made;
(b)a second mortgage over the Bell St property;
(c)second general security deeds over CFFL and CPL;
(d)the appointment of a commercial manager to whom Mr Cooper would report; and
(e)the making of various operational and administrative changes in the way in which the companies were run.
[26] Mr Cooper expressed no concerns about any of these requirements. Mr Alison advised that Russell McVeagh would draft the necessary documentation. He told
Mr Cooper to book an appointment with his lawyer so that they could get things moving quickly. Mr Cooper indicated that he would do so.
[27] In accordance with Mr Alison’s prerequisites for making the loan, he then asked Mr Sutherland if he would step in to manage the Cooper companies. Mr Sutherland was also a long-time friend of Mr Cooper’s. Mr Cooper had no objection and Mr Sutherland agreed. This arrangement was formalised in writing, also on 14 August 2017.
[28] On 17 August 2017, Mr Cooper sent a text message to Mr Alison which makes it clear that the loan documentation had not yet turned up and that he was anxious to “sort” it that day.6 An hour after that text was sent, Russell McVeagh sent PJAFT an email attaching the loan documents. Ms Bruwer’s evidence was that, following her receipt of that email:
(a)she telephoned Mr Cooper advising that the documents were ready for collection; and
(b)he subsequently picked the documents up at which point she reiterated the need to get legal advice before signing.
[29] Ms Bruwer also said that Mr Sutherland and Mr Cooper brought the loan documents back to PJAFT’s offices on 18 August. They had been signed by Mrs Cooper. Mr Cooper signed the documents during a subsequent meeting that day involving Ms Bruwer and Mr Sutherland, who witnessed his signature. This meeting was also recorded and transcribed.
[30] It was during this meeting that it was discovered that Mrs Cooper had not signed all the pages of the documents. Mr Cooper is recorded as then asking Mr Sutherland “can you sign it for her” to which Mr Sutherland said, “no I can’t do that”. Mr Cooper agreed that Mr Sutherland should visit Mrs Cooper at Firenzo to obtain the further signatures required. The suggestion in Coopers’ evidence that there was something untoward, unexpected or unwelcome in his then doing so is further
6 In the text message Mr Cooper also asked for a $10,000 advance.
contradicted by Mrs Cooper’s text to Mr Sutherland immediately after his visit was signed off with a “smiley face” emoji with hearts for eyes.7
[31] The above evidence leads to the conclusion that the Coopers’ account of Mr Sutherland coming to their home with the loan documentation to sign on 16 August 2017 was mistaken. Nor do I accept their evidence that Mr Sutherland was “desperate” for the loan documents to be executed. I accept his evidence (confirmed by others) that he had not undertaken paid work for some years because he was looking after his children so his wife (who is an anaesthetist) could pursue her career. There was no evidence of any particular financial or other need for the management job offered to him by Mr Alison.
[32] And lastly, I record that under cross-examination Mrs Cooper resiled from her affidavit evidence that she was subject to any pressure (undue or otherwise) from Mr Sutherland to execute the documents.
Subsequent events
[33] Even with the loan monies, the companies continued to struggle. It seems that this was for two principal reasons.
[34] First, there were several outstanding creditors who had not been disclosed. Mr Sutherland found overdue invoices and monthly IRD statements showing outstanding tax debts.
[35] Secondly, the funds were required and used not only for the purposes of the businesses but were also used to service SPTC’s debt to ANZ and the Coopers’ household expenses. It was this latter problem which caused Mr Alison to ask Mrs Cooper to pay rent and meet the outgoings on the Bell St property, including power, insurance and rates. She declined to do so.
7 A later email from Mrs Cooper to Mrs Bruwer after she was asked to authorise a final amendment to the authority and instruction form was also immediate and friendly.
[36] The short point is that the companies continued to exceed their budgeted expenditure and not to meet their income targets. Interest costs were continuing to mount. Mr Alison said, and I accept, that the companies were essentially insolvent.
The restructuring proposal
[37] In order to help CCFL and CPL to reduce their outgoings, Mr Alison and Mr Kelt came up with a proposal whereby PJAFT would effectively buy out the debt to ANZ and thereby eliminate the need to pay interest on the loans. The proposal was floated and developed at a meeting attended by Messrs Cooper, Sutherland and Kelt on 21 November 2017. PJAFT subsequently put the proposal in writing and sent it to CFFL and CPL, their accountants, their lawyer Mr McAra, SPTC and Mr and Mrs Cooper. Under the proposal:
(a)PJAFT would purchase the Bell St property for $701,000, on the basis that those funds would be used to pay off the debt to ANZ;8
(b)Mrs Cooper would be released from her guarantee;
(c)SPTC had the right to repurchase the Bell St property for the amount that PJAFT had paid for it, together with any associated transactional costs;
(d)PJAFT would hold the property until at least 31 March 2018 to give the companies the opportunity to repay the loan and reacquire the property;
(e)if the Bell St property had to be sold earlier, the proceeds would go to repaying the loans from PJAFT;
(f)SPTC would keep any excess; and
8 Although the property had been valued at $900,000 in May 2017, Mr Alison had obtained a property proposal from Bayleys in November 2017 which indicated a realistic sale price of
$730,000 - $760,000.
(g)no interest would be charged on the cost of PJAFT repaying the ANZ debt.
[38] On one analysis, therefore, PJAFT was effectively offering the Coopers an interest free loan of $700,000. PJAFT also offered to pay the Coopers’ costs for getting legal advice from Mr McAra.
[39] PJAFT set a deadline of 5pm on 29 November 2017 for acceptance of the proposal. In the meantime, PJAFT had to keep lending money to pay the interest on the ANZ debts.
[40]Then:
(a)on 29 November 2017, Mr McAra wrote to PJAFT’s lawyers rejecting the proposal on behalf of Mr Cooper;
(b)on 30 November 2017, PJAFT sent a letter of demand to CFFL;
(c)on 1 December 2017, PJAFT sent demands to the guarantors (Mrs Cooper, SPTC, Mr Cooper and CPL);
(d)on 4 December 2017, PJAFT served a mortgagee notice on SPTC with
copies of the notice sent to the companies and Mr and Mrs Cooper.
(e)further proposals were made and formalised in writing by PJAFT but, despite initial indications to the contrary, Mr Cooper refused to agree to any of them;
(f)PJAFT met with ANZ;
(g)on 2 March 2018, PJAFT was granted the right to sell the Bell St property, with a proposed sale date of 22 March 2018; and
(h)on 13 March 2018, PJAFT was served with Churchman J’s decision granting the without notice injunction.
[41] It is against the above factual matrix that the plaintiffs’ claims to have the guarantees and mortgage securities set aside must be considered. As noted earlier, they advance three grounds for doing so, namely:
(a)unconscionability;
(b)undue Influence; and
(c)oppressive conduct under the Credit Contracts and Consumer Finance Act 2003.
[42]I consider each in turn.
Unconscionability
[43] In order to establish that a bargain is unconscionable in the relevant sense a plaintiff must establish that:9
(a)he or she was under a “special disadvantage” due to lack of education, illness, age, mental or physical infirmity, stress or anxiety or some other factor; and
(b)the defendant knew of his or her disability or disadvantage and unconscionably took advantage of it.
[44] As to the first matter, my clear view is that Mrs Cooper was under no such disadvantage. While I acknowledge that she has no legal experience and no formal qualifications, those attributes are not necessary in order to provide a guarantee and indemnity and does not (without more) constitute a qualifying disability or disadvantage. Indeed, the plaintiffs’ pleading acknowledges that she had some (albeit limited) commercial ability.
9 Gustav & Co Ltd v Macfield Ltd [2007] NZCA 205 at [30] upheld on appeal to the Supreme Court
Gustav & Co Ltd v Macfield Ltd [2008] NZSC 47 [2008] 2 NZLR at 735 at [6].
[45] In any event, the evidence satisfies me that, in fact, Mrs Cooper understood the implications of giving a mortgage and a guarantee. There is a strong inference to be drawn (from Mr McAra’s signed confirmation to that effect) that she received legal advice about the effect of signing such documents when she executed the guarantees in 2016 for the purposes of the ANZ loans. She had entered into an almost identical transaction on a sufficient number of previous occasions to be aware of the nature of the transactions and their implications.
[46] And lastly, it seems plain that Mrs Cooper was familiar with insolvency events. As noted earlier, she was working for Cooper Horticulture Ltd and sharing an office with Mr Cooper throughout its receivership, during which assets were sold to meet the company’s debts.
[47] For the reasons just given, the plaintiffs have not established that Mrs Cooper (or SPTC) was under any material disability or disadvantage. And once that point is reached, there can be no issue about the second matter, namely whether PJAFT had knowledge of that disability. The claim of unconscionability fails accordingly.
Undue Influence
[48] In Hogan v Commercial Factors Ltd the Court of Appeal said that in order to determine whether a surety can avoid liability on the grounds of undue influence the following questions must be answered:10
(a)Was the surety subject to undue influence?
(b)If so, were the circumstances as known to the creditor such as to put the
creditor on inquiry as to the risk of undue influence?
(c)If so, did the creditor act in such a way as to insulate itself from the
consequences of such undue influence?
10 Hogan v Commercial Factors Ltd [2006] 3 NZLR 618 (CA) at [13].
[49] To prevail, a plaintiff must persuade the Court that the answers to these questions are “yes”, “yes” and “no” respectively.
Was Mrs Cooper subject to undue influence?
[50] At the outset, I put the allegation that Mrs Cooper was subject to undue influence from Mr Sutherland to one side. The Coopers’ account of his role does not hold water. While he may have been cognisant of the urgency of the matter from Mr Cooper’s perspective, I do not accept that Mr Sutherland brought any undue pressure on Mrs Cooper to sign the documents.
[51] As to Mr Cooper, it seems tolerably plain that he was desperate for the loan and that this would have been quite evident to any of those involved. I am sure that he would not have responded well had Mrs Cooper demurred or delayed. Equally, however, there is no evidence to suggest that Mrs Cooper was, in fact, reluctant. As Ms Robertson pointed out, she responded to the requests for further signatures from both Mr Sutherland and Ms Bruwer in a friendly and immediate way.
[52] Moreover, to the extent that Mrs Cooper was, in fact, influenced by her husband, I am unable to find that such influence was “undue”. The plaintiffs were not disadvantaged by this transaction. It was to their benefit. The evidence was that the loan was used to pay for household utilities and to provide income for Mr Cooper. Mrs Cooper (and SPTC) had a shared interest in facilitating the continued operation of CFFL and CPL and providing the companies with an opportunity to trade out of their difficulties. Without the further loan, it seems likely that the mortgage to ANZ may well have gone into default and the family home may well have been lost.
[53]In my view, the first question cannot be answered in the plaintiffs’ favour and
the undue influence claim should fail on that basis.
The remaining two issues
[54] Given my conclusion that there was no undue influence brought to bear on Mrs Cooper, it is difficult to consider the consequential two questions identified at
[49(b)] and [49(c)] above. There are, however, several matters I record, for completeness.
[55] In relation to the first “inquiry” point, I accept Ms Robertson’s submission that the standard of any inquiry required of PJAFT cannot be the same as that required of commercial lending institutions in the decided cases. As she said, it must be relevant to the overall equity of the transaction that PJAFT was not akin to a commercial lender. PJAFT does not have (and cannot be criticised for not having) the lengthy formal loan processes that banks and other financial institutions have. The loan was made solely because Mr Alison wanted to help his friend, Mr Cooper.
[56] And assuming for the sake of argument that Mrs Cooper had been unduly influenced by Mr Cooper, the evidence was that:
(a)PJAFT was provided with copies of the previous loans, guarantees and securities executed by Mrs Cooper/SPTC;
(b)PJAFT therefore knew that she had (willingly and with advice) offered the Bell St property as security for Mr Cooper's business previously;
(c)PJAFT knew that the loan would assist the Cooper family to stay in their family home and meet day to day living expenses;
(d)there was nothing to suggest from Mrs Cooper’s words or interactions with Mr Sutherland or Ms Bruwer to suggest that she had reservations or was otherwise uncomfortable with the loan proposal;
(e)PJAFT put significant effort into understanding the companies’ finances to satisfy itself that the companies would be able to operate successfully and repay the loan; and
(f)changes to the way in which the companies were managed were made at the insistence of PJAFT in an attempt to ensure these results.
[57] In my view, there was nothing that should have put PJAFT on notice that Mrs Cooper was under any disadvantage or that she was vulnerable in relation to the transactions.
[58] As far as the question of any steps taken by PJAFT to insulate itself from risk is concerned, I have noted earlier that it is clear that Mr Alison expressly sought and obtained confirmation from Mr Cooper that he (and presumably his wife) would obtain legal advice before signing the documents. I simply do not accept Mr Cooper’s evidence to the contrary. His specific evidence that he wanted to run the documents past Mr McAra but was not permitted time to do so is at odds with what he is recorded as saying at the meeting on 14 August (which is that he did not want to take the documents to Mr McAra). Any pressure to sign the documents quickly (and without advice) was self-imposed; it did not come from PJAFT.
[59] And again, it is relevant that PJAFT is not a bank in the business of lending. Any assessment of the steps it should reasonably have taken must be undertaken with that in mind. Were it necessary for me to express a firm view on the point, I would be inclined to conclude that it was not required to do more than it did to ensure that the Coopers were independently advised.
[60] But, in any event, and for the reasons I have given, the undue influence claim also falls at the first hurdle.
Credit Contracts and Consumer Finance Act 2003 (CCCFA)
[61] Part 5 of the CCCFA empowers the Court to reopen credit contracts in certain circumstances. More particularly, s 120(c) provides that the Court may reopen a credit contract if a party has induced another party to enter into the contract by “oppressive” means. As I understand it, the plaintiffs rely on this provision here, and seek to have the second mortgage reopened.
[62] The term “oppressive” is defined in s 118 as “oppressive, harsh, unjustly burdensome, unconscionable or in breach of reasonable standards of commercial practice”. But in light of my factual findings in relation to the first two causes of action, there is no evidential basis for concluding that Mrs Cooper was induced into
executing the mortgage by any means which might meet those descriptions. Mrs Cooper was put under no such pressure by PJAFT.
Conclusions
[63] For the reasons I have given, none of the elements of the plaintiffs’ causes of action have been made out and they are dismissed accordingly. It follows that the injunction granted by Churchman J is lifted. The defendant is entitled to its costs on a 2B basis.
Rebecca Ellis J
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