IN THE COURT OF APPEAL OF NEW ZEALAND
CA30/2010
[2010] NZCA 435BETWEENCRAIG ALEXANDER URQUHART
First AppellantANDDAVID JOHN MILLER
Second Appellant
ANDSPANBILD HOLDINGS LIMITED
Respondent
Hearing:16 September 2010
Court:Randerson, Rodney Hansen and Allan JJ
Counsel:R B Stewart QC and M C Smith for Appellants
G T Carter for Respondent
Judgment:23 September 2010 at 9.30 a.m.
JUDGMENT OF THE COURT
AThe application by the appellants for leave to adduce fresh evidence on appeal and to amend the grounds of opposition is dismissed.
BThe appeal is dismissed.
CThe appellants must pay to the respondent costs as for a standard appeal on a band A basis together with usual disbursements.
REASONS OF THE COURT
(Given by Randerson J)
Introduction
[1] The parties to this appeal are the shareholders in a company named FINCO Holdings Limited (Finco). The company’s shareholding is:
Spanbild Holdings Ltd 50%
Messrs Urquhart & Miller as Trustees 45%
of the Halstaff Trust
Mr Urquhart 5%
100%
[2] Messrs Urquhart and Miller were directors of the company along with a Mr Matheson and a Mr Waterfield representing Spanbild.
[3] Finco had a loan facility from the ANZ Bank supported by personal guarantees from each of the shareholders. In mid-2008, Finco was in breach of certain of its banking covenants including a requirement for a 20 per cent effective equity ratio. Negotiations followed which resulted in the Bank offering a new loan facility on conditions which included Finco restoring its effective equity ratio. In the meantime, the Bank made a formal demand under the guarantees from Finco and each of the shareholders for repayment of the amount owing under the existing facility.
[4] On 2 July 2008 Spanbild Holdings Ltd (Spanbild) provided funds of $1.218 million to Finco which were applied to meet the Bank’s requirements. This sum was sufficient to restore Finco’s equity ratio and to satisfy the Bank’s conditions precedent to the grant of the new loan facility. The Bank then advised the guarantors it would take no further action under the guarantees at that stage.
[5] Spanbild later sought summary judgment against the respondents for a contribution towards its payment to the Bank on a pro rata basis according to shareholding. Spanbild relied on clause 10.2 of a shareholders’ agreement entered into on 3 April 2006:
10.2 No guarantee: Subject to clause 10.3 below, no party shall be required to give any guarantee on behalf of the Company. If any of the parties make payment to any creditor of the Company under any guarantee or other obligation which that party may see fit to grant or undertake to assist the Company then the other parties will reimburse the party who has made the payment to the extent necessary to ensure that the parties’ contributions will be in the same proportions as the parties’ respective percentage Shareholding in the Company.
[6] The appellants’ defence to the claim was the payment was not made by Spanbild under its guarantee but was a shareholder’s loan to Finco. In a reserved decision…
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- Case
- [2010] NZCA 435
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