Thomas v Equipment Finance Ltd - [2014] NZHC 2542

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2014-470-053 [2014] NZHC 2542

UNDER
the District Courts Act 1947 and the

Judicature (High Court Rules) Amendment
Act 2008

IN THE MATTER

of an appeal against a decision of the
District Court at Tauranga

BETWEEN

SHANE ROGER THOMAS AND KMA GROUP LTD

Appellants

AND

EQUIPMENT FINANCE LTD Respondent

Hearing: 21 July 2014 (at Hamilton)

Counsel:

NC King for Appellants
SM Dwight for Respondent

Judgment:

16 October 2014

JUDGMENT OF BREWER J

This judgment was delivered by me on 16 October 2014 at 11:00 am pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors: Bell and Graham (Matamata) for Appellants
Cavell Leitch (Christchurch) for Respondent

THOMAS AND KMA GROUP LTD v EQUIPMENT FINANCE LTD [2014] NZHC 2542 [16 October 2014]

Introduction

[1] This judgment determines appeals against a reserved judgment of Judge PR Spiller delivered on 6 March 2014 and against the subsequent costs judgment delivered on 2 April 2014.

Background

[2] KMA Group Ltd (“KMA”) had a business that included printing sportswear and sports uniforms. It needed specialised equipment for that and approached Equipment Finance Ltd (“EFL”) for finance.

[3] In 2004, EFL financed the purchase of a Roland Soljet S2-270 machine (“the Roland Soljet”) through a lease to own agreement with KMA. KMA’s obligations were guaranteed by Mr Thomas.

[4] In 2005, EFL lent KMA $33,750 on the security of a Metalnoz Sublimation Press (“the Metalnoz Press”) and a Sars Simplex screen print machine (“the Sars Simplex”). KMA’s obligations were again guaranteed by Mr Thomas.

[5] KMA’s business did not prosper. It defaulted under its contracts with EFL. It then approached Data Vision Ltd (“DVL”), a specialist dealer in used printing equipment, to sell the three machines. DVL agreed and, in 2007, took possession of them, plus ancillary equipment, for that purpose. Shortly afterwards EFL took possession of the machines as it was entitled to do under its contracts with KMA. However, EFL left the machines with DVL to sell.

[6] Eventually the machines were sold. In 2008, the Roland Soljet and some of the ancillary equipment fetched $20,000 plus GST. In 2010, the Sars Simplex and some ancillary equipment sold for $4,000 plus GST. In 2011, the Metalnoz Press was sold for $7,000 plus GST.

[7] The sales of the machines did not recover what EFL was owed under either of its contracts with KMA, so it sued Mr Thomas on his guarantees.

[8] The first proceeding claimed $9,760.99 on the agreement relating to the Roland Soljet (707 proceeding).1 The second proceeding claimed $19,733.53 and was in respect of the loan of $33,750 (717 proceeding).

[9] KMA retaliated by suing EFL for $78,000 (3451 proceeding).

[10] The three proceedings were consolidated and heard by Judge Spiller together. The Judge:

(a) Dismissed EFL’s claim in the 707 proceeding. He found that EFL did not discharge its duty to sell the Roland Soljet for a reasonable price, and that the undervalue equated to the amount of EFL’s claim, thus cancelling…

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.

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Details

Case: [2014] NZHC 2542
Decision Date: 16 October 2014

CaseChat Overview and Summary

In this appeal, Shane Roger Thomas and KMA Group Ltd challenge the decision of the District Court at Tauranga, handed down by Judge Spiller on 6 March 2014, as well as the subsequent costs judgment delivered on 2 April 2014. Equipment Finance Ltd is the respondent. The primary issues before the court were whether the Judge correctly equated the undervalue identified in the 707 proceeding with the sum claimed by Equipment Finance Ltd, whether the Judge wrongly held that Equipment Finance Ltd discharged its duty to obtain reasonable prices, and whether the Judge’s awards of costs were appropriate.

The court found that the Judge’s decision not to equate the undervalue with the sum claimed by Equipment Finance Ltd in the 707 proceeding was correct. The appeal against the Judge’s decision that Equipment Finance Ltd discharged its duty to sell for reasonable prices was also dismissed, as the court found that the Judge did not put the onus on the appellants to prove that the machines were not sold at the best price. The Judge was entitled to find that Equipment Finance Ltd took reasonable and appropriate steps to discharge its obligations under the Personal Property Securities Act 1999. The appeal regarding the 3451 proceeding was dismissed, as the Judge should have given KMA the benefit of his decision that the Roland Soljet had been sold at an undervalue.

Regarding the costs, the court found that Judge Spiller was correct to award costs to the successful parties in the 707, 717 and 3451 proceedings. There is no general duty on Judges to give reasons for costs orders. The Judge did not err by not awarding costs from the point at which Mr Thomas failed to attend the Disputes Tribunal hearings.

The appeals are dismissed, and Equipment Finance Ltd is entitled to costs against each appellant, which may be calculated by the Registrar on a 2B basis.

Orders