Thorn v RFD Finance Limited - [2012] NZHC 1959

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2010-409-2807 [2012] NZHC 1959

UNDER the Property Law Act 2007

BETWEEN SIMON JOHN THORN, DAVID IAN RUSCOE, TIMOTHY WILSON DOWNES
Plaintiffs

ANDRFD FINANCE LIMITED First Defendant

ANDLIVINGSPACE PROPERTIES LIMITED (IN RECEIVERSHIP)
Second Defendant

Hearing: 27 June 2012

Counsel: R B Stewart QC, D Lester and K M Lawson for Plaintiff
A J Forbes QC for First Defendant

Judgment: 7 August 2012

JUDGMENT OF POTTER J
on application for interim relief

In accordance with r 11.5 High Court Rules
I direct the Registrar to endorse this judgment with a delivery time of 3 p.m. on 7 August 2012.

Solicitors: Goodman Tavendale Reid, Christchurch – michael.singleton@gtrlaw.co.nz
Canterbury Legal Services Ltd, Christchurch – grant@canterburylegal.co.nz

Copy to: B Stewart QC, Auckland – rbstewart@xtra.co.nz
D M Lester, Christchurch – dmlester@xtra.co.nz
A J Forbes QC, Christchurch – aforbes@clear.net.nz

THORN, RUSCOE, DOWNES V RFD FINANCE LIMITED HC CHCH CIV-2010-409-2807 [7 August 2012]

Introduction

[1] The focus of a hearing before me on 27 June 2012 was interim relief sought by the plaintiffs who are the receivers of the second defendant. They sought an order that the first defendant (RFD) withdraw from possession of the whole of the personal property, goods and accounts receivable in relation to the serviced accommodation business of the second defendant, Livingspace Properties Limited (in liquidation and receivership) (Livingspace) in Dunedin and Invercargill, upon such terms as the Court thinks just.

The proceedings

[2] The proceedings were commenced by a statement of claim filed on 8

December 2010. By the amended statement of claim dated 18 May 2012, the plaintiffs seek:

(a) An order declaring that RFD does not hold a valid and effective security over the assets of Livingspace;

(b)In the alternative (if RFD is held to hold a valid security) an order permitting Equitable Property Holdings Ltd (Equitable) (of which the plaintiffs are receivers) to redeem the charged property on terms (the proposed terms essentially seek to protect RFD for the amount properly due under its security if valid, following the taking of accounts, and require RFD to provide full disclosure so that accounts can be properly taken in respect of the Livingspace business).

(c) An order directing that RFD withdraw from possession of the personal property of Livingspace including the accounts receivable relating to the personal property.

[3] At the interim relief hearing the plaintiffs did not pursue the first basis of claim, namely the challenge to the validity of the security held by RFD. This will be an issue for the substantive hearing.

How the interim relief application came before the Court

[4] A fixture was allocated for two days in the week commencing 25 June 2012. A minute of Chisholm J dated 6 June 2012 states that the fixture is allocated on the basis that the question of whether or not there should be redemption would be first established and depending on the outcome, there would be a further hearing in relation to quantum.

[5] A further minute of Chisholm…

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: [2012] NZHC 1959
Decision Date: 7 August 2012

CaseChat Overview and Summary

The plaintiffs, receivers of the second defendant Livingspace Properties Limited, sought interim relief from the Court to direct the first defendant, RFD Finance Limited, to withdraw from possession of Livingspace’s personal property. The Court heard the application for interim relief on 27 June 2012. RFD opposed the application on the grounds that the Court did not have jurisdiction under section 171 of the Property Law Act 2007 (PLA) and that interim relief was inappropriate due to disputed evidence and other issues. The Court found that it had jurisdiction to grant the relief sought and that interim relief was justified due to the plaintiffs’ reasonably arguable case, the balance of convenience and overall justice favouring the plaintiffs, and the plaintiffs’ willingness to meet any prejudice to RFD. The Court directed the parties to confer to agree on the terms of the interim relief. Consent orders granting interim relief on terms and conditions were made on 2 August 2012.

The Court considered the parties’ arguments on whether the Court had jurisdiction to make interim orders under section 171 of the PLA. The plaintiffs argued that section 171 applied, while RFD argued that the Personal Property Securities Act 1999 (PPSA) governed redemption of the General Security Agreement. The Court found that section 171 of the PLA was available to the plaintiffs to seek interim relief as the regimes under the PPSA and PLA were parallel and not inconsistent.

The Court found that interim relief should be granted as the circumstances no longer justified RFD remaining in possession as mortgagee. The Court noted that on RFD’s own figures, it had received sufficient to cover repayment of the amounts secured plus interest and costs. The plaintiffs’ case appeared arguable and the balance of convenience and overall justice strongly favoured the plaintiffs. Any prejudice to RFD was fairly met by the plaintiffs’ undertakings.

The Court granted interim relief to the plaintiffs, subject to the parties agreeing on the terms and conditions. The terms and conditions of the interim orders were subsequently agreed and consent orders made on 2 August 2012. The plaintiffs were awarded costs of category 2B for two counsel.

Orders