UDC Finance Limited v Brunton - [2014] NZHC 2247

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2014-470-000065 [2014] NZHC 2247

BETWEEN
UDC FINANCE LIMITED

Plaintiff

AND

RAY LEWIS BRUNTON First Defendant

RAY LEWIS BRUNTON and MARIAN PATRICIA BRUNTON as Trustees of the R L and M P Brunton Family Trust Second Defendant

Hearing: 25 August 2014

Counsel:

M Pascariu for the Plaintiff
M J Fisher and P Hardie for the Defendants

Judgment:

17 September 2014

JUDGMENT OF ASSOCIATE JUDGE BELL

This judgment was delivered by me on 17 September 2014 at 11.30 a.m.
Pursuant to Rule 11.5 of the High Court Rules
.....................................................
Registrar/Deputy Registrar

Solicitors:
MinterEllisonRuddWatts, Auckland
Jones Howden Lawyers, Matamata

UDC v BRUNTON [2014] NZHC 2247 [17 September 2014]

[1] UDC Finance Limited sues Mr and Mrs Brunton for $373,034.26 under a guarantee they gave on 13 September 2004 for the indebtedness of RMD Logging Limited. It has applied for summary judgment. There was no dispute as to the principles applied on a summary judgment application.1

[2] In opposition, Mr and Mrs Brunton raise three matters:

1.Any judgment against Mrs Brunton should not be enforceable against her personally, but should be limited to the assets of the R L and M P Brunton Family Trust.

2.By reason of a representation made in September 2004, UDC is estopped from suing them in respect of RMD Logging Limited’s indebtedness under a guarantee it gave for advances UDC made to Stroke Logging Limited.

3.In selling machinery of RMD Logging Limited over which it held security, UDC did not comply with its duty of reasonable care to obtain the best price reasonably obtainable.

[3] The first matter is not contentious. On 11 October 2004 UDC wrote to Mr and Mrs Brunton confirming that the guarantee signed by Mrs Brunton was limited to the assets of the trust. UDC accepts that for summary judgment purposes, Mrs Brunton has an arguable defence that any judgment should not be enforced against her personally, but that UDC may be subrogated to her position as trustee to seek indemnity out of the trust assets.

Facts

[4] For the other issues, I set out some of the factual background.

[5] As its name suggests, RMD Logging Limited carried on business as a logging contractor. Mr Brunton was its director. The shareholders were the trustees of the

1 See the summary in Krukziener v Hanover Finance Limited Ltd [2008] NZCA 187, (2008) 19
PRNZ 162 at [26].

R L and M P Brunton Family Trust, and Mr and Mrs Brunton. The trustees were Mr and Mrs Brunton and their lawyer, Mr Clancy.

[6] Between 2004 and 2011 UDC made loans to RMD Logging Limited. The last, made on 15 August 2011, was for $1,874,251.34. UDC had security over machinery owned by RMD Logging Limited. On 13 September 2004 UDC obtained a guarantee. The guarantors were Mr Brunton personally, and the trustees of the R L and M P Brunton Family Trust. The guarantee recorded that Mr Clancy would not have an unlimited personal liability under…

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 2247
Decision Date: 17 September 2014

CaseChat Overview and Summary

UDC Finance Limited is suing Mr and Mrs Brunton for $373,034.26 under a guarantee they provided on 13 September 2004 for the debt of RMD Logging Limited. UDC has applied for summary judgment. The Bruntons oppose the application on three grounds. Firstly, they argue that any judgment against Mrs Brunton should be limited to the assets of the R L and M P Brunton Family Trust and not enforceable against her personally. Secondly, they argue that UDC is estopped from enforcing the guarantee due to a representation made in September 2004. Thirdly, they argue that UDC breached its duty of reasonable care in selling RMD Logging Limited's machinery. The court finds that the Bruntons have arguable defences on the first and third issues, but not the second. Therefore, the application for summary judgment is dismissed. The Bruntons must file and serve statements of defence by 29 September 2014, but may not rely on the estoppel defence. A case management conference will be held to discuss discovery and other directions. Costs on the summary judgment application are reserved.

Orders