Tan Investment Pte Limited v Goldhem Group Limited HC Auckland CIV 2010-404-1187
[2010] NZHC 1172
•28 June 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2010-404-001187
BETWEEN TAN INVESTMENT PTE LIMITED Plaintiff
ANDGOLDHEM GROUP LIMITED First Defendant
ANDSANDEEP AGGARWAL Second Defendant
ANDPALLAVI GUPTA Third Defendant
Hearing: 28 June 2010
Counsel: BM Stewart for plaintiff
JWL Green for defendants
Judgment: 28 June 2010 at 11:00am
(ORAL) JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for summary judgment]
Solicitors: Simpson Western, Private Bag 93 533, Takapuna for plaintiff
Aaron Kashyap, PO Box 26 596, Auckland for defendants
TAN INVESTMENT PTE LIMITED V GOLDHEM GROUP LIMITED AND ORS HC AK CIV 2010-404-
001187 28 June 2010
[1] The plaintiff filed an application for summary judgment against the first defendant for breach of a loan agreement and against the second and third defendants as guarantors of the first defendant.
[2] The defendants filed an appearance objecting to the court's jurisdiction to hear the application for summary judgment. That was followed by the application for stay which I am now required to determine. The basis for the application for stay is the defendants’ claim that the plaintiff is contractually bound to attend a mediation before it is permitted to pursue its summary judgment application.
[3] The plaintiff was the former owner of a leasehold interest in the premises situated at 92 Great South Road, Newmarket, Auckland. At the same time a company, H2K Investments Ltd, owned and operated a motel business from the premises.
[4] On 23 July 2008, the plaintiff in this proceeding as vendor and the first defendant as purchaser entered into a written agreement for sale and purchase of the premises. Pursuant to clause 18 of that agreement, the plaintiff agreed to advance money to the first defendant purchaser to assist with the purchase.
[5] There is no provision in the agreement for sale and purchase of the premises dealing with dispute resolution.
[6] Also on 23 July 2008 H2K Investment Ltd, as vendor, and the first defendant, as purchaser, entered into a contract for the sale and purchase of the business. Clause 13 of that agreement sets out a procedure for dispute resolution. Clause 13 provides:
13.0 Dispute resolution
13.1Unless otherwise provided in this agreement, if a party considers that there is a dispute in respect of any matters arising out of, or in connection with this agreement, then that party shall immediately give notice to the other party setting out details of the dispute. The parties will endeavour in good faith to resolve the dispute between themselves with five (5) working days of receipt of the notice, failing which the parties will endeavour in good faith within a further ten
(1) working days to appoint a mediator and resolve the dispute, time being of the essence.
13.2Neither party will commence legal proceedings against the other except for injunctive relief before following the procedure set out in subclause 13.1
[7] The plaintiff, as lender, and the first defendant, as borrower, and the second and third defendants, as guarantors, entered into a loan agreement which was designed to assist the first defendant with the purchase of the premises. That agreement was dated 30 October 2008.
[8] There is no reference in the loan agreement to either the premises agreement or the business agreement. There is no provision in the loan agreement for dispute resolution. Clause 7(a) of the loan agreement provides the following rights to the plaintiff in the event of a default:
7. Rights and powers of lender on default
(a)Rights and powers generally: If default occurs, the lender may at any time or times thereafter, in addition, to any rights, remedies or powers otherwise conferred upon the lender by law, exercise all or any of the following rights and powers separately or concurrently:
i)call up the balance of the moneys owing in accordance with clause 8; or
ii) obtain judgment and enforce such judgment against you (and if more than one of you, all or any one of you) for all the moneys owing or if the amount realised from the exercise of any of the lender’s rights and powers in any security interest is not sufficient to pay the moneys owing in full, the amount of such deficiency.
[9] The first defendant’s purchase of the business from H2K Investment Ltd and the premises from the plaintiff were settlement contemporaneously on or about
31 October 2008. That occurred, no doubt, as a result of the advance made by the plaintiff to the first defendant in the loan agreement.
[10] For the purposes of this application, the evidence discloses that the first defendant failed to make payment of any moneys due under the loan agreement. That has led to the application for summary judgment. In making these observations
I do observe, however, that as yet no notice of opposition and no affidavits in opposition have been filed in relation to the summary judgment application.
[11] The court may stay a proceeding where there is an agreement to mediate. The jurisdiction to do so is exercised pursuant to the court’s power, and in particular, hcr 15.1: Braid Motors v Scott,[1] Fisher & Paykel Financial Services Ltd v Credit Management Services Ltd[2] HW Richardson Group Ltd v Maslin Stevenson &
Company Ltd.[3]
[1] Braid Motors v Scott (2001) 15 PRNZ 508
[2] Fisher & Paykel Financial Services Ltd v Credit Management Services Ltd HC Auckland CIV-2006-404-6646, 16 May 2008 per Rodney Hansen J.
[3] HW Richardson Group Ltd v Maslin Stevenson & Company Ltd HC Wellington CIV-2008-425-168, 17 June 2008 per Ronald Young J.
[12] The premises agreement and the business agreement have terms each making the other conditional on settlement of the other. No such provision appears in the loan agreement. However, those provisions do not bear necessarily on the dispute resolution position.
[13] It is apparent that the issues between the parties, which term I use in the loose sense, relate principally to matters that the first defendant complains about and which arise from the business agreement. The parties to that agreement are not parties to the loan agreement.
[14] Faced with the problem that the loan agreement parties are different, Mr Green submitted that the correct approach was to imply a term along the lines of that which is contained in clause 13 of the business agreement. He referred me to the classic test for implying terms contained in BP Refinery (WesternPort) Pty Ltd v
President, Councillors and Ratepayers of the Shire of Hastings[4] which are:
[4] BP Refinery (WesternPort) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 16 ALR 363 (PC) at 376.
a) it must be reasonable and equitable;
b)it must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it;
c) it must be so obvious that “it goes without saying”;
d) it must be capable of clear expression; and
e) it must not contradict any express term of the contract.
[15] The test has been approved in a number of New Zealand cases, for example,
Dovey v Bank of New Zealand.[5]
[5] Dovey v Bank of New Zealand [2003] 3 NZLR 641 at 654.
[16] I am not satisfied that it is appropriate, on the material before me, to imply the dispute resolution term as a term of the loan agreement. I am not satisfied, for example, that there has been provided to me any clear term which would cover the precise situation which I understand the first defendant opines for. That would seem to be that any dispute arising under any of the agreements must be referred to mediation or alternative dispute resolution before action is taken before the courts in respect of any of the agreements. There is no justification for implying terms as wide as that, in my view, in the material that has been placed before me. Indeed, the particular dispute does not directly involve the plaintiff at all.
[17] Without the implication of a term, then there is simply no justification for the stay which is sought by the defendants.
Orders
[18] I order as follows:
a) The application for stay is dismissed;
b) In respect of the summary judgment application,
i)A notice of opposition and affidavits in opposition shall be filed and served by 19 July 2010;
ii) Reply affidavits shall be filed and served by 26 July 2010;
iii)The application shall be listed in the summary judgment list before me at 2:15pm on 12 August 2010.
I indicate to counsel that if no opposition is filed or if an opposition is filed and the matter can be determined summarily at that time it may well be so determined. Otherwise, I
anticipate that it would be further adjourned for a fixture.
Costs
[19] The plaintiff has been successful in opposing the application for stay. Mr Stewart seeks costs on a 2B basis. That is appropriate in this case. Accordingly I order costs on the stay application to be paid by the defendants based on Category 2
Band B, together with disbursements as fixed by the Registrar.
JA Faire
Associate Judge
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