Vuletic v Contributory Mortgage Nominees Ltd - [2006] NZCA 191

IN THE COURT OF APPEAL OF NEW ZEALAND
CA250/05
BETWEENITA VULETIC

Appellant

ANDCONTRIBUTORY MORTGAGE NOMINEES LIMITED

Respondent

Hearing:17 May 2006

Court:Chambers, Baragwanath and Venning JJ
Counsel:R E Harrison QC for Appellant

L McEntegart for Respondent

Judgment:31 July 2006

JUDGMENT OF THE COURT

AThe appeal is allowed.
BOrders 1, 2, and 4 as set out in the judgment of the High Court as sealed on 19 December 2005 are set aside.
CThe respondent’s application for summary judgment against the appellant is dismissed.
DThe respondent must apply to the High Court for the convening of a case management conference so that directions as to the future conduct of the proceeding may be given.
E Costs in the High Court with respect to the summary judgment application are reserved, for determination by that court at an appropriate time if the parties cannot agree them.
FWith respect to costs in this court, the respondent must pay to the appellant the sum of $6,000, plus usual disbursements.
G Liberty is reserved to the parties to apply to this court for any other orders consequential on the above orders.

REASONS OF THE COURT
(Given by Chambers J)
Liability under a guarantee
[1]       This appeal is concerned with whether Ita Vuletic, the appellant, is liable as guarantor to Contributory Mortgage Nominees Limited, the respondent. Associate Judge Faire held that she was liable: Contributory Mortgage Nominees Limited v Harris Road No 10 Limited HC AK CIV 2005-404-3078 27 October 2005.
[2]       The essential facts can be shortly stated. Contributory Mortgage held a mortgage over a property at Hulme Place in Henderson, Auckland. On 21 November 2003, Contributory Mortgage, exercising its power of sale as mortgagee, entered into a contract to sell the property to Harris Road No 10 Limited for $2.5 million, plus GST. The terms of the agreement between the parties were captured in two documents, which were linked. We shall call the main document, which was the agreement for sale and purchase, “the sale agreement”. The other agreement, which we shall call “the mortgage back agreement”, provided that Contributory Mortgage was to provide or procure for Harris Road “second mortgage funding for the balance of the purchase price”.
[3]       A critical term of the sale agreement, so far as this appeal is concerned, was clause 26:
This agreement shall be personally guaranteed by ITA VULETIC a director and shareholder of HARRIS ROAD NO 10 LIMITED as Trustee to the intent that the obligations of the purchaser or nominee shall be paid personally by the said ITA VULETIC if the purchaser and/or its nominees shall fail to complete the agreement and terms thereof. This agreement shall bind the executors, administrators and assigns of ITA VULETIC.

[4] Settlement of the purchase took place on 23 January 2004. At that time, Harris Road did not pay the GST component of the sale price, namely $312,500. The reason for that was a provision (clause 6) in the mortgage back agreement, by which Harris Road was immediately upon settlement to…

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: [2006] NZCA 191
Decision Date: 31 July 2006

CaseChat Overview and Summary

This appeal concerns whether Ita Vuletic, the appellant, is liable as guarantor to Contributory Mortgage Nominees Limited, the respondent. The appeal was heard by Chambers, Baragwanath, and Venning JJ. The appellant's primary argument was whether she signed the sale agreement in a dual capacity. The Court found it fairly arguable that Mrs Vuletic signed the sale agreement only as a director of Harris Road. The court found that the structure and words of the sale agreement reinforced the presumption that Mrs Vuletic signed only in her capacity as director of Harris Road. The court concluded that summary judgment should not have been entered against Mrs Vuletic as there were no extrinsic facts or matters which might colour the court's interpretation. The appeal was allowed, and the proceeding must now proceed to trial. The formal judgment of the High Court was set aside, and the respondent's application for summary judgment against Mrs Vuletic was dismissed. The respondent must pay Mrs Vuletic's costs in this court.

Orders