Trotter v Avonmore Holdings Ltd - [2005] NZCA 192

IN THE COURT OF APPEAL OF NEW ZEALAND
CA162/04
BETWEENELIZABETH ANNE TROTTER

Appellant

ANDAVONMORE HOLDINGS LIMITED

Respondent

ANDJAMES RICHARD WILLIAM WEBB

Cross Appeal Respondent

Hearing:7 July 2005

Court:Glazebrook, Chambers and O'Regan JJ
Counsel:M E J Macfarlane for Appellant and Cross-Appeal Respondent

S R Maling for Respondent

Judgment:1 August 2005

JUDGMENT OF THE COURT

A The appeal is allowed and the cross-appeal dismissed.
BCosts of $6,000 plus usual disbursements are awarded to the appellant and the cross-appeal respondent.

REASONS
(Given by Glazebrook J)
Table of Contents
Para No

Introduction  [1]
Background facts  [4]
The licence agreement  [8]
Judgment of Gendall J  [14]
Submissions of the parties  [21]
Submissions of Ms Trotter and Mr Webb  [21]
Submissions of Avonmore  [23]

Discussion  [27]
Result and costs  [36]
Introduction
[1]       This appeal concerns the liability of Ms Trotter and Mr Webb under a licence agreement entered into by the respondent, Avonmore Holdings Limited, as Licensor and a company that was then known as ACP Computer Solutions Limited as Licensee. Ms Trotter and Mr Webb were, at all relevant times, directors and shareholders of ACP. Avonmore contends that Ms Trotter and Mr Webb signed the licence agreement in their dual capacity as directors and shareholders of ACP. It contends that, as a consequence, in terms of the licence agreement, they, as shareholders, guaranteed ACP’s obligations under the licence agreement and also provided an indemnity to Avonmore.
[2]       On 13 July 2004, Gendall J, in a judgment dealing also with a number of other matters that are not under appeal, held that Ms Trotter signed the licence agreement in her dual capacity as director and shareholder and was therefore liable as an indemnifier and guarantor under the licence agreement. He also held that it was not established that Mr Webb signed the licence agreement in his dual capacity and accordingly the claim against him was dismissed.
[3]       Ms Trotter appeals against the finding that she signed the licence agreement in her dual capacity and thus that she is liable as an indemnifier and guarantor under that agreement. Avonmore cross appeals with respect to the finding that Mr Webb was not liable as an indemnifier and guarantor.
Background facts
[4]       Avonmore and its related companies have been in business since 1988 offering training courses over a wide range of industries. Avonmore has developed a system whereby it licenses other private training establishments to offer and conduct courses. One of those licensees was ACP.
[5]       Before entering into the licence agreement, there were discussions between Avonmore and ACP, represented largely by Ms Trotter. Ms Trotter had taken advice from her solicitor and some changes were made to Avonmore’s draft agreement as a result of his advice. A letter of 24 November 1999 from Avonmore to Ms Trotter enclosed a copy of the redrafted agreement, indicating a number of changes that had been made to the agreement at the request of ACP and other potential licensees. The letter said, however:
“[T]here are some points we cannot move on…

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: [2005] NZCA 192
Decision Date: 1 August 2005

CaseChat Overview and Summary

In Trotter v Avonmore Holdings Limited, the Court of Appeal of New Zealand addressed the liability of Elizabeth Anne Trotter and James Richard William Webb under a licence agreement between Avonmore Holdings Limited and ACP Computer Solutions Limited. The dispute centered on whether Trotter and Webb, as directors and shareholders of ACP, signed the licence agreement in their dual capacity, thereby making them personally liable for the obligations of ACP under the agreement.

The Court of Appeal found that neither Trotter nor Webb signed the agreement in their dual capacity as both directors and shareholders. The agreement specifically designated spaces for signatures of directors, which were filled by Trotter and Webb, but no shareholder signatures were present. Moreover, the shareholder attestation clause remained blank at the time of signing. The Court held that the intention of the signatories, whether communicated or not, was irrelevant for determining the capacity in which they signed. The objective interpretation of the document indicated that Trotter and Webb signed solely in their capacity as directors of ACP.

As a result, the appeal by Trotter was allowed, and the cross-appeal by Avonmore was dismissed. Consequently, neither Trotter nor Webb was held liable under the shareholders' covenant clause of the agreement. The Court also awarded costs of $6,000 plus usual disbursements to Trotter and Webb, to be shared between them.

Orders