Waimauri Limited v Powell Junior Limited
[2025] NZHC 332
•28 February 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-001694 [2025] NZHC 332
UNDER Part 18 of the High Court Rules 2016 AND UNDER
Section 137 of the Property Law Act 2007
BETWEEN
WAIMAURI LIMITED
Plaintiff
AND
POWELL JUNIOR LIMITED
Defendant
Hearing: 19, 20, 21, 22, 23, and 26 August 2024 Appearances:
M J W Lenihan for Plaintiff
J R Harvey for the Defendant (Self-represented)
Judgment:
28 February 2025
JUDGMENT OF ANDERSON J
This judgment was delivered by me on 28 February 2025 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.
.…………………………..
Registrar/Deputy Registrar
Solicitors: Brown Partners Lawyers, Auckland Copy to J Harvey
WAIMAURI LTD v POWELL JUNIOR LTD [2025] NZHC 332 [28 February 2025]
Table of contents
Para No
Background[3]
PJL Loan[11]
Dealings after the loan agreement[16]
Glenvale Holdings Ltd Loan Agreement[24]
The $162,500 “top up”[34]
Continued dealings[38]
The Exit Agreement[40]
Liquidation of GHL and subsequent settlement[42]
Cross-lease title and substitution of the mortgage[44]
Notice of default[45]
PJL’s position[49]
Was the PLA Notice valid? [66]
The $162,500 top up[70]
Payments under the GHL Loan[73]
Was Waimauri estopped from enforcing the sums due because of the Exit Agreement? [75]
Elements of estoppel[78]
Analysis[79]
26 April 2018 email[83]
Reopening of contract under the CCCFA [95]
PJL’s pleading[98]
Circumstances surrounding entry into the PJL Loan[106]
Analysis of circumstances around entry into the PJL Loan[121]
The terms of the contract[127]
Consumer credit contract “in substance”[131]
Oppressive exercise of powers[136]
Conclusion on whether to reopen the contract[137]
Result[138]
[1] The applicant, Waimauri Ltd (Waimauri), has a registered mortgage over a residential property at 2/35 Powell Street, Avondale (the property). It seeks an order for possession under s 137(1)(c) of the Property Law Act 2007 (the PLA) on the basis that the mortgagor, Powell Junior Ltd (PJL) has failed to remedy defaults, namely failure to pay sums due, set out in a notice issued under s 119 of the PLA (the PLA Notice).
[2] PJL is the registered owner of the property. It opposes the application on the basis that the PLA Notice was invalid because PJL did not owe the amount demanded. It brings a counterclaim seeking orders under s 127 of the Credit Contracts and Consumer Finance Act 2003 (CCCFA), on the grounds that the loan agreement between the parties (the PJL Loan) was oppressive. Alternatively, it submits Waimauri is estopped from exercising its powers under the mortgage.
Background
[3] Waimauri is a property financier. All but one share in the company is owned by Mr Timothy Edney, who is the sole director. There is only one other staff member, Mr Josh Penny, who managed the PJL Loan.
[4] Mr Jason Harvey is the sole director of PJL. He and his wife are equal shareholders. PJL was incorporated for the purposes of obtaining a loan from Waimauri in the circumstances outlined below.
[5] Mr Harvey’s then brother-in-law, Mr Peter Chevin, was a property developer. Mr Chevin had used Waimauri for financing at various times in the past. Mr Chevin had just started work on a subdivision at Te Kauwhata, which Waimauri was funding through means I describe later. Mr Chevin was in regular contact with Mr Edney. Mr Harvey was assisting Mr Chevin with the subdivision.
[6] In 2015, Mr and Mrs Harvey were living in the house on the property. They wanted to acquire it as their family home. Title to the property was held by a financier,
under terms granting an option to purchase to Mr Chevin or Mr Harvey, in a form of financing arrangement. The financier wanted to exit and was impatient to do so.
[7] There were uncompleted works carried out on the house on the property. Further works were required to obtain a code compliance certificate (CCC). There were also irregularities in the title which needed to be resolved through an application to council and issue of a new cross-lease title. These complications meant that mainstream finance was not an available option for the Harveys. They needed bridging finance until they could resolve the CCC and title issues with a view to refinancing later with a trading bank.
[8] On 29 April 2015, Mr Chevin emailed Mr Edney, seeking to obtain bridging finance for the Harveys from Waimauri. He provided Mr Edney with a spreadsheet outlining an estimate of the cost to complete the works required for the CCC. Mr Edney said he wanted a second opinion as to cost and needed to know how the Harveys were going to finance the work. He also wanted to see a timeline.
[9] Mr Harvey then contacted Mr Edney directly. After they discussed the project, Mr Edney gave a verbal indication over the phone that he could provide finance. Further communications followed. I will come back to the detail of these when I consider PJL’s assertion that the PJL Loan was entered into in circumstances that give grounds to reopen it under the CCCFA.
[10] On or about 13 May 2015, Mr Edney told Mr Harvey that the borrower would need to be a company. Mr Edney says this is because Waimauri is not in the business of making consumer loans. PJL was registered as a company on 14 May 2015.
PJL Loan
[11] On 15 May 2015, PJL and Waimauri entered into the PJL Loan. The terms of the loan were set out according to the standard form Auckland District Law Society template. Waimauri was to lend $557,907.50 to PJL. The term expiry date was 15 November 2015.
[12] The interest commencement date was 15 May 2015, paid fortnightly in arrears. Interest was payable at 12 per cent per annum, with a higher rate after default of 22 per cent per annum. Interest would be payable on the whole of the principal sum, including a retention sum of $30,000 that I discuss below, as from the interest commencement date. The principal sum was repayable in one sum together with interest and all other moneys then outstanding on the term expiry date.
[13] A registered all-obligations mortgage with a priority amount of $900,000 was required to be granted over the property. This was done on 15 May 2015, the day the PJL Loan was executed.
[14] PJL was required to pay not less than $1,400 on each fortnightly interest date, commencing on 29 May 2015, on account of the interest payable on the principal sum. The balance of the interest payable was to be capitalised and added to the principal sum, with each interest payment thereafter to be calculated on the increased principal sum.
[15]Further terms specific to the loan included the following:
(a)PJL was required to carry out and complete in a “proper and workmanlike manner” all works required to obtain the CCC.
(b)Waimauri retained $30,000 from the principal sum to be paid to PJL or direct to suppliers in relation to the works (the payments to be subject to certain provisos).
(c)PJL was to provide monthly progress reports.
(d)PJL agreed to take all steps necessary to enable the grant of a cross-lease for the dwelling at the property and the issue of a composite cross-lease title for PJL’s undivided half-share of the land and leasehold interest in the dwelling. These were the title issues that needed to be resolved.
(e)Upon the issue of title, PJL agreed to grant to Waimauri a first mortgage over the title in substitution for a mortgage taken by Waimauri as security for the loan on the same terms and conditions.
(f)Under the terms of the mortgage, PJL appointed Waimauri as the attorney of PJL for the purposes of doing all acts and executing all documents that PJL agreed to do under the loan agreement while any moneys remained owing and unpaid.
Dealings after the loan agreement
[16] After setting up the loan and mortgage, Mr Harvey had limited contact with Mr Edney. Contact was mostly through Mr Chevin. I accept that from 22 October 2015 until Mr Chevin and Mr Harvey fell out in late December 2017, Mr Chevin effectively acted as an intermediary between PJL and Mr Harvey in respect of the PJL Loan.
[17] On 22 October 2015, Mr Harvey emailed Mr Edney and sought an extension of the term of the loan. Mr Edney agreed to extend it. He made clear that this was only until 26 February 2016.
[18] Mr Harvey liaised with Mr Penny about drawing down on the $30,000 in retention money. By 22 January 2016, these funds were exhausted.
[19] On 5 and 9 February 2016, Mr Harvey emailed Mr Penny informing him that PJL was refinancing and asking for a payout figure for the PJL Loan. This was provided.
[20] Waimauri heard nothing further until 25 February 2016. On that day, Mr Chevin emailed Mr Edney about the loan. He advised that they “I/we” were expecting a “good sized” [sic] sum coming through on 29 March 2016 but there was low cashflow until then. He set out what conditions “we” could commit to. These conditions included extending the loan facility until 30 May 2016. The email recorded that a new bank funding offer for the Harveys would be forwarded to Waimauri by the following Wednesday, which was conditional only on a CCC being issued.
[21] Mr Edney was unhappy with extending the loan. What had been intended as bridging finance was becoming a longer-term loan. On 25 February 2016, Mr Edney instructed Mr Penny to draft a letter putting the PJL Loan into default from 24 February 2016.1 Mr Penny sent a notice of default to Mr Chevin on 1 March 2016, advising that Mr Edney had “instructed [him] to send this to Jason Harvey, via you.”
[22] Mr Chevin and Mr Harvey made several attempts to procure refinancing of the PJL Loan. However, the lack of a CCC and the fact that a new cross-lease title had not been issued were problematic. Their efforts were unsuccessful.
[23] Despite the continued default, and unsuccessful attempts to refinance, Mr Edney says he did not call on the PJL Loan because he was concerned that would imperil the Te Kauwhata subdivision development. Mr Harvey was deeply involved in that development. Calling up his home mortgage would therefore be very destabilising.
Glenvale Holdings Ltd Loan Agreement
[24] By 2016, the Te Kauwhata subdivision development was nearing completion. Waimauri had funded over $2 million. However, the arrangements were unorthodox. Mr Edney’s interests had taken title to the land. Most of the funding was by Waimauri paying contractors directly and for the purchase price of the land. No loan agreement had been entered into. The funds Waimauri were applying to the development were being tracked on a spreadsheet maintained by Mr Penny.
[25] Glenvale Holdings Ltd (GHL) was incorporated on 16 March 2016 to take ownership of and sell down the subdivided lots in the Te Kauwhata subdivision. Mr Chevin was disqualified from being a director of GHL due to prior bankruptcies. Accordingly, Mr Harvey was the sole director of GHL from its incorporation until around December 2017. He had resigned at the latest by March 2018. I return to this later.
1 This was two days premature, but nothing turns on this.
[26] In order to obtain title to the land to sell the lots, GHL needed to enter a loan agreement with Waimauri and agree terms for Mr Edney’s interests to transfer the land to GHL, which would then sell down the titles. The loan agreement was entered into between Waimauri and GHL on 26 July 2017 (the GHL Loan).
[27] The GHL Loan was substantial. GHL assumed liability for $5.8 million before interest. Broadly, as well as agreeing to provide finance of over $3.7 million for the subdivision itself, which included sums borrowed to date, GHL agreed to assume liability for debts and obligations owned by other entities to Mr Edney’s interests. This included repayment of the PJL Loan.
[28] The commercial terms were set out in a spreadsheet emailed by Mr Penny to Mr Chevin on 18 July 2017. Clause 3.3 of the GHL Loan linked the GHL Loan to the PJL Loan. It provided:
The Borrower acknowledges and agrees that advances made by the Lender at the Borrower’s request to Powell Junior Limited (as documented by [the] term loan agreement dated 15th May 2015) will, if still outstanding, be repaid by the Borrower on the term expiry date.
[29]The “term expiry date” of the GHL Loan was 30 September 2017.
[30] Clause 3.3 reflected the parties’ hope that the PJL Loan would be repaid out of the proceeds of the sales of the subdivided lots. This also bought PJL time to refinance.
[31] The parties are in dispute as to whether cl 3.3 constitutes a guarantee, or GHL agreeing to repay the PJL Loan as principal. I return to this later. Mr Harvey also raises issues about other terms of the GHL Loan.
[32] The GHL Loan was drafted by GHL’s solicitor. Mr Harvey was a guarantor and received independent legal advice. He also signed a director’s certificate on 26 July 2017 on behalf of GHL approving transactions that extended to the GHL Loan.
[33] Settlement and payment to Waimauri in respect of the Te Kauwhata subdivision lots took longer than expected. The first settlement and payment did not
occur until 11 November 2017. By that point, the GHL Loan was in default and accruing compound interest of 18 per cent under its terms.
The $162,500 “top up”
[34]On 3 August 2017, Mr Chevin sent Mr Edney an email in which he asked that
$162,500 be debited to the GHL Loan and credited to the PJL Loan. The parties refer to this as the “top up”.
[35] Mr Edney allowed this to occur. Mr Chevin requested the “top up” to help make up the difference between a loan offer that PJL had received and what was required to repay the PJL Loan. In effect, the purpose of the top up was to help facilitate a refinance of the PJL Loan that Mr Chevin was trying to procure, intended to be obtained by 22 August 2017. Although that proposed refinance did not occur, the top up was left in the PJL Loan ledger until late 2019. Mr Edney says that this was to help facilitate any other refinancing proposals that arose and was to the benefit of PJL.
[36] As discussed below, the top up credit was removed from the PJL Loan balance set out in the PLA notice issued to PJL.
[37] Waimauri subsequently re-credited the top up amount to the PJL Loan ledger. That is because Waimauri does not now seek recovery of the top-up. That is the scope of the concession. Whether the amount of the top up and any associated interest is legally outstanding remains in issue. It is of potential relevance to the validity of the PLA notice.
Continued dealings
[38]Mr Chevin and Mr Harvey fell out in around December 2017.
[39] On 28 February 2018, Mr Chevin emailed Mr Edney saying the subdivision was “not going to be able to repay very much of the [PJL Loan]” . At that time, Mr Chevin was attempting to refinance the GHL Loan.
The Exit Agreement
[40] Mr Harvey and parties associated with Mr Chevin entered into an agreement on 29 March 2018 (the Exit Agreement). Waimauri was not a party.
[41] The Exit Agreement was attached to an email to Mr Chevin from his solicitor on 29 March 2018. Mr Edney was copied in. PJL says this email shows Waimauri knew of the terms of the Exit Agreement and agreed to them. Waimauri strongly rejects this for reasons I discuss later. PJL relies on this email together with an email Mr Penny sent to Mr Chevin on 26 April 2018, which Mr Chevin then forwarded to Mr Harvey, as creating an estoppel and/or establishing that Waimauri agreed to be bound by the Exit Agreement. Again, I address the detail of this later.
Liquidation of GHL and subsequent settlement
[42] On 11 October 2018, GHL was placed in liquidation by the IRD. Five lots of the Te Kauwhata subdivision were unsold. Waimauri proceeded to exercise its powers as mortgagee to sell the remaining lots.
[43] There were a number of claims between Waimauri and GHL. Ultimately, an agreement was reached between the liquidators of GHL and Waimauri in full and final settlement of those claims.
Cross-lease title and substitution of the mortgage
[44] A new cross-lease title to the property was issued on 9 April 2018. On 7 November 2019, Waimauri exercised its power of attorney under the PJL Loan to register a mortgage over the cross-lease title in substitution for the mortgage registered on 15 May 2015.
Notice of default
[45] As recorded above, the PJL Loan has been in default since 26 February 2016. PJL has not made any payments of interest or on the principal sum since 28 February 2020. There have only been five payments since 16 March 2018. The balance of the PJL Loan was $2,233,353.80 as at 22 March 2024.
[46] Mr Edney had some discussions with Mr Harvey in 2019 about resolving the default. On 16 September 2019, Mr Harvey said to Mr Edney that he would start paying $400 per week from 20 October 2019 and that this amount would increase over time. Some payments were made, But then ceased.
[47]On 17 November 2019, Waimauri served PJL with the PLA Notice.
[48] The PLA Notice stated that the action to remedy the default was the payment of $1,196,539.32. The date specified by Waimauri for PJL to remedy the default was on or before 28 February 2020. The notice expired unremedied.
PJL’s position
[49]The two affirmative defences raised by PJL to the action for possession are:
(a)that Waimauri is estopped from exercising its rights as mortgagee; and
(b)that the PJL Loan should be reopened under s 120(c) of the CCCFA on the basis that the contract was an oppressive contract.
[50] PJL also asserts that the PLA notice is invalid because PJL did not owe the amount demanded in the notice.
[51] Before I turn to the above defences, I address a range of issues PJL raised in response to the positive allegations in the pleading and in the presentation of its case. Mr Harvey represented PJL, having been given leave to do so earlier in the proceedings. I outline the gist of Mr Harvey’s complaints as best I can without intending to be exhaustive.
[52] The primary area of complaint relates to the dealings between Waimauri and Mr Chevin, the GHL Loan and the liquidation of GHL:
(a)Mr Harvey puts in issue the background dealings and unorthodox arrangements between Waimauri and Mr Chevin’s interests.
(b)He criticises the process by which the GHL Loan was entered into and its content. For example, he said the agreement improperly included a large fee payable to Waimauri that was related to past dealings between Waimauri and Mr Chevin’s interests, as well as other old loans.
(c)He says that the loan ledger/spreadsheet recording sums owed by GHL was false or inflated by other old loans, and by interest that should not have been included. As to the latter, Mr Harvey contended that interest was wrongly added to sums paid prior to the date of the GHL Loan. He says those funds had been “lent” only in the sense that under the arrangement with Mr Chevin, Mr Edney’s interests had taken title to the Te Kauwhata property and Waimauri had funded the development and land costs.
(d)Mr Harvey asserts that Waimauri effected a mortgagee sale or forced sale of lots in the Te Kauwhata subdivision and adjacent land, including to parties associated with Waimauri. He says these were at an undervalue and/or dealings associated with them were improper.
(e)Mr Harvey says that Waimauri conducted itself in respect of the Te Kauwhata subdivision in a way that that caused delays to the works and hence compromised GHL’s ability to pay down debt.
(f)Mr Harvey says that GHL may not have gone into liquidation had Waimauri not acted in the manner described above, and that GHL could have paid the sums owing prior to liquidation.
(g)He says that sums that became available were or should have been applied to the PJL Loan.
Mr Harvey reconstructed the loan ledger maintained by Mr Penny in an attempt to establish the above points.
[53] Other broad areas of complaint relate to Waimauri dealing with Mr Chevin relating to applying the credit of $162,000 against the PJL Loan, and alleged conduct associated with the Exit Agreement. These are engaged in the affirmative defences that I will address later.
[54] The above is only a subset of the issues raised but is an attempted summary. I have considered carefully the full range of matters that Mr Harvey advanced on behalf of PJL. I do not intend to be dismissive of these points or the strength of Mr Harvey’s feeling behind them. Ultimately, however, with the exception of the matters I discuss in the affirmative defences later, the matters raised are not material in the legal framework that applies.
[55] The only legally relevant link between GHL and PJL in connection with the PJL Loan is cl 3.3 of the GHL Loan. Under this clause, GHL became obliged to repay the PJL Loan on the expiry of the term of the GHL Loan “if [amounts of the PJL Loan were] still outstanding.” The substance of the obligation GHL undertook is plainly one of guarantor, not indemnity or joint debtor.2 Pre-contractual exchanges between the two experienced solicitors acting for the parties reinforce that a guarantee was intended.
[56] Many of PJL’s complaints outlined above involve Waimauri’s conduct relating to the origins of the GHL Loan, its operation, and whether GHL could have avoided liquidation.
[57] However, PJL obtained no rights under the GHL Loan. Rather, Waimauri obtained a guarantee from GHL of PJL’s indebtedness. PJL cannot rely as principal debtor on defences available to GHL as guarantor.
[58] Fundamentally, PJL’s complaints are wholly extraneous to the relationship between PJL and Waimauri. Waimauri characterised this as PJL having no “standing”
2 The absence of the word “guarantee” in the clause is not determinative, the issue being a matter of construction of the clause: Geraldine Andrews & Richard Millett Law of Guarantees (7th ed, Sweet & Maxwell, London, 2015) at [1-014]. Although fact specific, the same conclusions were drawn on clauses which were arguably more of a guarantee than the present case in Associated British Ports v Ferryways NV [2009] EWCA Civ 189, [2008] All ER (D) 165 (Jun); and Kingston v Ellis HC Auckland CIV 2004-404-2412, 7 November 2007.
to raise these matters. That may well be the appropriate concept. As matters extraneous to the rights and obligations between Waimauri and PJL, they are legally irrelevant as providing a defence or set-off to PJL’s loan obligation.
[59] Underscoring this difficulty for PJL is that in August 2020, Waimauri entered into a settlement with the liquidators of GHL whereby Waimauri paid GHL a sum in full and final settlement of all claims between them. PJL could not retain rights that GHL had settled.
[60] Another consequence of the legal framework is that GHL was not obliged to use its funds to pay down PJL’s indebtedness. I find that it did not appropriate funds for that purpose and neither did Waimauri.3 This undermines PJL’s assertion that its debt either was or should have been paid off, and Waimauri’s liquidation could have been averted.
[61] Moreover, a payment to PJL could well have been vulnerable to a claim that it was a preference in any event.4 As Waimauri says, GHL was likely insolvent from 2018. Although Mr Harvey endeavoured to show that (had other loans not been included under the GHL Loan) GHL would have averted liquidation, I am far from persuaded. Other substantial debts were owed by GHL. Moreover, PJL did not establish that Mr Chevin could or would have directed that payments by GHL be directed to the PJL Loan ahead of GHL’s other creditors.
[62] Putting aside the legal impediments to a defence based around the GHL Loan, the loan was drafted by GHL’s solicitor and hence was entered into with legal advice. Mr Harvey was guarantor of the GHL Loan. He also signed a director’s certificate on behalf of GHL. The circumstances do not readily permit Mr Harvey to now assert issues with the legitimacy of the transactions recorded in the document which are not for PJL to raise in any event.
3 When a guarantor owes money to a lender its capacity, it should expressly appropriate a payment made to funds being paid on account of the guaranteed debt: Andrews and Millett, Law of Guarantees (7th ed Sweet & Maxwell, 2015) at 9-003. This is a corollary of the principle that a creditor has a right of appropriation to a particular debt if it is not exercised by the debtor: John Odgers KC and Ian Wilson KC (editors), Paget’s Law of Banking (16th ed, 2023), [10.2-10.5]
4 Companies Act 1993, s 292
[63] In advancing the propositions outlined above, Mr Harvey also relied upon affidavits, valuation reports, or communications by parties not before the Court. Accordingly, there are also hearsay impediments to his case.
[64] The way Mr Harvey presented PJL’s case means that there were a plethora of other factual issues and associated factors in the wider background placed before the Court. The wide scope of these is reflected in the size of the common bundle and that close to 300 of 358 pages of the notes of evidence related to Mr Harvey’s cross-examination of Mr Edney and Mr Penny, the only two witnesses for Waimauri. I need not venture into this detail given my above conclusion and my findings on the other defences, which rest on a narrower narrative.
[65]I now turn to consider the substantive defences pleaded.
Was the PLA Notice valid?
[66] Section 119 of the PLA provides that a mortgagee may not exercise their powers over land unless a notice compliant with s 120 has been served and the default has not been remedied by the expiry period specified in the notice. It is common ground the notice complied with the service requirements.
[67] Section 120 requires that a notice specify, among other things, the nature and extent of the default. Where the alleged default is related to payment of sums due, mere overstatement of an amount that is due will not necessarily render the notice defective.5 Gross overstatement, however, will likely render a notice defective.6
[68]PJL submits the PLA Notice is invalid on two bases:
(a)the PLA Notice did not record the balance of the loan as being reduced by the $162,500 top up; and
5 Clyde Properties Ltd v Tasker [1970] NZLR 754 (SC) at 758; and Parker v Rock Finance Ltd
[1981] 1 NZLR 488 (CA) at 494.
6 Australian Guarantee Corp (NZ) Ltd v Slade CA 256/91, 24 August 1992 at 19.
(b)payments made by GHL as guarantor of the PJL Loan were not recorded in the balance.
[69]I address each assertion in turn.
The $162,500 top up
[70] As outlined above, a credit of $162,500 (loan reduction) was applied to the PJL Loan account in August 2017. It was taken out of the PJL Loan statement in the PLA Notice.
[71] The credit was applied at Mr Chevin’s request to assist efforts by PJL to refinance. Had refinancing been obtained, Waimauri may potentially have been precluded from contending that the top-up was owing by PJL. However, in substance the credit was only ever applied conditionally. No refinancing was ever obtained. No consideration was given for any discharge of that part of the debt, nor do I find that the circumstances gave rise to a waiver or estoppel. In those circumstances, in my view application of this credit to the PJL Loan statement was not effective to discharge PJL’s liability for the top up. Hence it was open for Waimauri to include it in the PLA Notice, and the notice is not invalid on that account.
[72] If liability for the principal of $162,500 had been discharged (contrary to my above conclusion), the PLA Notice overstated the amount owing on the PJL Loan by the amount of the top up and interest accrued on it as at the date of the loan statement. I do not consider this amount to be so grossly excessive relative to the over $1 million in accrued debt that it would invalidate the notice.
Payments under the GHL Loan
[73] PJL appears to submit that under cl 3.3 of the GHL Loan, GHL made payments to Waimauri in satisfaction of the PJL Loan and that these payments were not recognised in the balance set out in the PLA Notice.
[74] This contention is answered by the impediments to PJL’s narrative I outlined earlier. I accept Waimauri’s submission that it was entitled to apportion amounts to
GHL’s liabilities as it did under the GHL Loan Agreement, which was extraneous to the PJL Loan. Moreover, GHL did not purport to make payments in reduction of PJL’s loan (other than arguably the conditional reduction instigated by Mr Chevin involving the $162,500 top up).
Was Waimauri estopped from enforcing the sums due because of the Exit Agreement?
[75] The Exit Agreement is between Mr Harvey and the corporate trustee of the Northern Investors Trust (NIT), which was a trust associated with Mr Chevin. Under the Exit Agreement, NIT agreed:
(a)to procure from Waimauri an immediate reduction in the total capital and interest amount owed in connection with the PJL Loan to $649,000;
(b)to procure immediate agreement from Waimauri that Mr Harvey would be responsible for only that reduced capital sum;
(c)to immediately assume responsibility for all future interest payments in connection with the PJL Loan; and
(d)to clear the balance of the PJL Loan ($649,000) by 30 June 2018.
[76]PJL claims that Waimauri:
(a)had knowledge of the Exit Agreement;
(b)acquiesced in the Exit Agreement;
(c)agreed with the parties associated with Mr Chevin that it would act in accordance with the Exit Agreement and hold PJL liable for no more under the PJL loan than $649,000, including interest, fees, charges or other additions;
(d)by words or conduct created an expectation or belief that it would act in accordance with the Exit Agreement; and
(e)did act in accordance with the Exit Agreement, and with the belief or expectation it created.
[77] PJL claims that it relied on those expectations by taking no action to repay the PJL Loan. It says that PJL would suffer detriment if Waimauri was permitted to depart from the expectation it created. Accordingly, PJL says that if Waimauri has any claim it is for no more than the sum of $649,000 stated in the Exit Agreement.
Elements of estoppel
[78]Four elements are required to establish estoppel:7
(a)the creation or encouragement of a belief or expectation;
(b)reliance by the other party;
(c)detriment to that party as a result of that reliance; and
(d)that it would be unconscionable for the party creating the belief or expectation to depart from it.
Analysis
[79] Waimauri submits that PJL fails in its estoppel claim on the first of these elements. In reference to the points PJL relies upon, Waimauri says that there is no evidence that Waimauri/Mr Edney:
(a)agreed to be bound by the Exit Agreement;
(b)by words or conduct encouraged a belief that it would act in accordance with the Exit Agreement; or
(c)did act in accordance with the Exit Agreement.
7 Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZLR 567 at [44]; and Gold Star Insurance Co Ltd v Gaunt [1998] 3 NZLR 80 (CA) at 86.
[80] PJL relies on Mr Edney having received a copy of the agreement on 29 March 2018, and on an email Mr Penny sent to Mr Chevin that Mr Chevin then forwarded to Mr Harvey on 26 April 2018.
[81] The Exit Agreement was attached to an email to Mr Chevin from his solicitor dated 29 March 2018. PJL obtained this email only on discovery so was not aware of it at material times. For the following reasons, I do not accept that this demonstrates that Waimauri agreed to be bound by the Exit Agreement, or created an expectation that it considered itself bound that PJL then relied on.
[82] First, Mr Edney said that he probably did not read the Exit Agreement despite receiving an email attaching that document. He said he only became aware of the substance of the Exit Agreement after the PLA Notice was issued. I accept this evidence for the following reasons:
(a)Mr Edney was a copy-only recipient of the email which he received on his cell phone. The email was copied to others also.
(b)The first line of the email refers to attaching the “signed agreement”. However, the solicitor then turns to the pressing issue that is the focus of the email. The email advised that an unpaid contractor of GHL was going to file liquidation proceedings at 1 pm that day unless GHL agreed to a payment schedule that had been proposed. The email requested that Mr Chevin “urgently seek [his] lender’s written approval and have that copied to us so that proceedings are not filed.” Mr Edney says that at about the time of the email, Mr Chevin rang and briefed him about the contractor. The contractor was seeking payment of around $100,000. Mr Chevin told Mr Edney that the contractor was threatening to pour concrete down pipes and infrastructure if it was not paid what it said it was due immediately. I accept that these immediate threats and the email requesting for more money to pay the contractor dominated Mr Edney’s attention.
(c)The email did not ask for Waimauri’s consent to the terms of the Exit Agreement as it related to the PJL Loan. I accept that the Exit Agreement was not a document that Mr Edney or Mr Penny had discussed with anyone prior to this point. Had it come to Waimauri’s attention at the time, in my view it is inevitable that Waimauri would have rejected being bound by its terms. Mr Edney is an experienced property investor. Neither PJL nor Mr Chevin’s interests had any leverage to propose an amendment to the existing arrangements. I accept Waimauri’s submission that it would be inconceivable for Waimauri to agree or acquiesce to arrangements through which Waimauri’s existing security would be lost or impaired and/or would result in Waimauri being unable to enforce its rights under the PJL Loan and security. I find that it did not do so.
26 April 2018 email
[83] I now turn to the second email PJL relies for its estoppel claim. On 26 April 2018, Mr Penny emailed Mr Chevin saying:
Just to confirm the [PJL Loan] balance is [$649,000] and [GHL] will meet all further interests costs [sic] moving forward.
[84] Immediately after receiving Mr Penny’s email, Mr Chevin forwarded it to Mr Harvey. He also copied his solicitors and Mr Clive Vermont, who had replaced Mr Harvey as director of GHL. Waimauri was not copied in. The email was apparently forwarded by Mr Chevin to show that he was carrying out the terms of the Exit Agreement. Waimauri says it had no knowledge that Mr Penny’s email was going to be used for that purpose.
[85] The background to the email from Waimauri’s perspective is that up to that point, Mr Chevin had kept Mr Edney and Mr Penny informed of a number of attempts to refinance the PJL Loan The loan related to his own sister’s home, so he had an additional incentive to procure this. As outlined earlier, one such attempt had led to Waimauri applying a credit or top up of $162,500 to the PJL Loan.
[86] On or about the date of the 26 April 2018 email, Mr Chevin again told Mr Edney that there was a proposed refinance and requested that Mr Penny send an email to assist with this. I accept that the Exit Agreement was not discussed with Mr Edney or Mr Penny at the time of this email. As I have said, I am confident that Waimauri would not have agreed to be bound by its terms had it been raised.
[87] By this time, the PJL Loan had been in default for over two years. Mr Edney said in evidence he was happy for such an email to be sent if it meant that this led to refinancing and Waimauri being repaid. The balance of $649,000 was only a little lower than the balance of the PJL Loan ledger at that point, which was around
$662,576.14 at 30 April 2018. The narrative of Mr Chevin asking for an email to use for refinancing purposes is much more likely than Mr Chevin raising the Exit Agreement in this context.
[88] The email was sent to Mr Chevin for one purpose but then used by him for an unauthorised one (that is, to convey to Mr Harvey that he was carrying out the terms of the Exit Agreement). In my view, that scenario does not lead to Waimauri being bound to the Exit Agreement, or having represented to PJL the matters stated in the email. Mr Chevin was not acting as an agent for Waimauri or for PJL. Nor, when looking at the bigger picture, did Waimauri have reason to believe the email would be used in this unauthorised way, because Waimauri had no knowledge of the Exit Agreement in the first place.
[89] In addition, PJL’s assertion that Waimauri agreed to act in accordance with the agreement or encouraged a belief that it would do so does not square with the wording of the email. Clause 1(c) of the Exit Agreement required NIT to assume responsibility for interest payments going forward. But Mr Penny’s email refers to GHL assuming responsibility for interest going forward. I agree with Waimauri’s submission that this is a substantive difference, because the subdivision was being sold down by GHL, not NIT. Agreement between Waimauri and NIT would need to be discussed and documented.
[90] The fact that the email refers to GHL and not NIT reinforces the argument that Mr Penny’s email resulted from a request for a loan balance and email to assist with
an attempt to refinance, rather than Mr Edney agreeing to be bound by the Exit Agreement. The fact that Mr Penny did not change the PJL Loan ledger at the time also suggests the figure was supplied only for the purpose of refinancing.
[91] For the above reasons, the estoppel defence fails because PJL has not shown that Waimauri had knowledge of the Exit Agreement or acquiesced in it, or that Waimauri agreed to be bound by the agreement or encouraged any belief or expectation by representing that it would act in accordance with it.
[92] Although strictly unnecessary to decide, I also reject that PJL relevantly relied upon any representation or conduct by Waimauri. In his cross-examination of Mr Edney, Mr Harvey asked why the former never called him to say that the loan remained in default and interest was not being paid. I consider this point to be of little weight. Even when taking a perspective of Mr Penny’s email most favourable to PJL, in my view Mr Harvey could and should have made his own enquiries about the status of the PJL Loan given that he had fallen out with Mr Chevin by this stage.
[93] Under the terms of the Exit Agreement, the balance of $649,000 was to be cleared by 30 June 2018. Had Mr Edney and Mr Penny been aware of this, then one or both would have asked about the payment. As Mr Lenihan for PJL submitted, it is highly surprising that Mr Harvey did not do the same.
[94] Finally, Waimauri highlights that PJL has had the use and occupation of the property for free since 28 February 2018, apart from five payments made to Waimauri since then. I accept Waimauri’s submission that even had the first elements of estoppel been made out, this factor would weigh against the estoppel operating in whole or part because it would not be unconscionable for Waimauri to depart from the belief created.
Reopening of contract under the CCCFA
[95]The PJL Loan and associated mortgage is a credit contract under the CCCFA.8
PJL asks the Court to reopen the credit contract under s 120 of the CCCFA. It also
8 Credit Contracts and Consumer Finance Act 2003 [CCCFA], ss 7 and 119.
seeks a range of consequential orders under s 127 that would relieve PJL of its obligations and preclude Waimauri enforcing its rights as a mortgagee.
[96] The Court may reopen a credit contract only if the Court considers one of the statutory grounds in s 120 are established. These are:
(a)the contract, lease, or transaction is oppressive; or
(b)a party has exercised, or intends to exercise, a right or power conferred by the contract, lease, or transaction in an oppressive manner; or
(c)a party has induced another party to enter into the contract, lease, or transaction by oppressive means.
[97] Oppressive is defined in s 118 as “oppressive, harsh, unjustly burdensome, unconscionable, or in breach of reasonable standards of commercial practice”. The test is whether the transaction, in whole or in part, contravenes reasonable standards of commercial practice.9 The burden of proof is on the person making the allegation of oppression, including the burden of demonstrating what is reasonable commercial practice.10
PJL’s pleading
[98] PJL relies on all three of the statutory grounds in s 120. First, PJL pleads that the contract is oppressive under s 120(a) for the following reasons:
(a)all of the circumstances relating to the inducement to enter into and the making of the contract;
(b)the amount payable under the credit contract is oppressive; and
(c)the terms of the credit contract are oppressive in general.
[99] The pleading parrots the statute without particularisation, apart from (a) for which PJL says:
9 GE Custodians v Bartle [2010] NZSC 146, [2011] 2 NZLR 31 at [46].
10 KBL Investments Ltd v KBL Courtenay Ltd [2016] NZCA 227 at [79].
(a)that Waimauri required the Harveys to incorporate PJL such that the provisions of pt 2 of the CCCFA as regards “consumer credit contracts” did not apply;
(b)that Waimauri made no disclosure in accordance with pt 2; and
(c)Mr Harvey suffered from anxiety and depression and Waimauri’s conduct in relation to the PJL Loan and mortgage caused him a great deal of stress.
[100] Second, under s 120(b), PJL says Waimauri has, or intends to exercise its power in oppressive manner having regard to:
(a)all of the circumstances relating to the exercise of the rights or powers;
(b)the disparity in bargaining power of the parties, both at the time when the credit contract was made and since;
(c)that PJL and the Harveys were not reasonably able to protect their respective interests, given their particular characteristics;
(d)that the credit contract was in substance a consumer credit contract;
(e)that Waimauri subjected PJL to unfair pressure or tactics, or otherwise unfairly influenced PJL to enter into the credit contract;
(f)the terms of other arrangements under which PJL could have obtained the same or substantially similar credit, including the costs of borrowing and the fact that the credit contract imposes significantly more onerous terms on PJL than would be imposed under other arrangements;
(g)the amount payable by PJL under the credit contract;
(h)the form of the credit contract; and
(i)that the terms of the credit contract did not allow PJL to be reasonably able to comply with its obligations thereunder, and were not reasonably necessary to protect the interests of Waimauri.
[101] Again, the above pleading is in substance simply a recast of the statutory guidelines as to matters the Court is directed to take into account in deciding whether to reopen a credit contract. An exception is item (d) of the list above. The statutory guidelines direct the Court to take into account “whether the contract is a consumer credit contract”,11 whereas the pleading is that the credit contract is in substance such a contract.
[102] Third, under s 120(c), PJL says that Waimauri induced PJL and the Harveys to enter into the contract by oppressive means, having regard to all of the circumstances relating to the inducement to enter into and the making of the contract. The only specifics particularised are the same as relied upon as set out at [100] above.
[103]PJL also seeks various orders under s 127 of the CCCFA. These are:
(a)that the contract be set aside or that Waimauri refrain from exercising its rights as mortgagee;
(b)that possession of the property is fully vested in PJL;
(c)that any outstanding obligation of PJL under the PJL Loan be extinguished or revised so that PJL is to pay no more than the sum of
$649,000; and
(d)that any provision allowing Waimauri to charge interest or penalties be set aside.
11 CCCFA, s 124(1)(e).
[104] In addressing the above arguments, I marshal the various issues relied upon by PJL into the following subjects:
(a)circumstances surrounding the entry into the credit contract;
(b)matters associated with the contract itself; and
(c)the exercise of powers under the contract.
[105] I reiterate that PJL’s pleading was woefully particularised. Further, PJL failed to provide evidence on a number of the propositions it asserted, as I will discuss below.
Circumstances surrounding entry into the PJL Loan
[106] I referred at the outset to the circumstances in which the PJL Loan was entered into. I now explore those events in greater detail. The Harveys wanted to acquire the property, which needed work done to obtain a CCC, the obtaining of which was necessary to regularise the cross-lease title. The loan from Waimauri was short-term bridging finance for that purpose. Mr Edney of Waimauri was introduced to Mr Harvey through his brother-in-law, Mr Chevin. The owner/financier of the property wished to exit. His “finance/security” arrangement was via holding the title subject to some form of option for the Harveys or Mr Chevin to purchase.
[107] On 29 April 2015, Mr Chevin emailed Mr Edney, seeking to obtain bridging finance from Waimauri for the Harveys. He provided Mr Edney with a spreadsheet with an estimate of the cost to complete the works required for the CCC. Mr Edney responded that he wanted a second opinion as to cost and needed to know how the Harveys were going to finance the work. He also wanted to see a timeline.
[108] Mr Harvey then contacted Mr Edney directly. Mr Edney gave a verbal indication over the phone that he would provide finance. This was recorded in an email sent to Mr Edney by Mr Harvey on 1 May 2015 that:
It was a pleasure to talk to you last night and to receive the news that you will help us with our home mortgage. This is Melinda and my shot [sic] at a family home for the kids and we really appreciate it. That being said I am completely aware this is a business arrangement that carries a certain amount of risk and
understand your need to feel comfortable around our ability to finish and fund the work in the time necessary.
[109] Mr Harvey provided an outline of costs and steps. He commented that he anticipated significantly lower costs than budgeted through doing the work himself. Mr Edney responded, querying whether some jobs could be done in parallel, referring to the need to get a CCC as soon as possible.
[110]Mr Harvey responded later on 1 May 2015, in which he said:
Yes, we will do things concurrently, I was just presenting a worst case scenario, so you could feel comfortable with our commitment.
It is my intention to progress rapidly to facilitate your exit as rapidly as possible [while] still managing costs and cash flow[.]
As you know my major focus at present is to keep [the financier] happy and to get him out asap.
How soon do you think we can get a signed loan offer that I can present to him?
[111] Mr Edney appears to have sent an email to which he received no reply.12 On 3 May 2015 he sent a further email to Mr Harvey and Mr Chevin noting the lack of reply and asking whether Mr Harvey was still interested in being “bailed out”. Mr Edney said he used this language because he understood that the financier was becoming unwilling to deal with Mr Harvey.
[112] The next written communication was not until 8 May 2015, from Mr Chevin.13 In this, Mr Chevin was negotiating on the Harveys’ behalf an alternative transaction by which Mr Edney’s interests would purchase the property, then give the Harveys an option to repurchase. A draft option agreement was attached (but is not before the Court). Mr Chevin concluded the email advising: “We need to progress this as soon as we can.”
[113] Mr Edney was not attracted to this new proposal. He responded expressing exasperation at Mr Chevin’s email, and commented that he was losing a desire to be involved.
12 This email was not before the Court but I infer one existed from the other email chains.
13 Based on the email exchanges, there appear to have also been at least one or more oral communications in the background of the email chains.
[114] On 11 May 2015, Mr Harvey sent an email to Mr Edney which was conciliatory and endeavouring to get things back on track with the option/buy back agreement that had been prepared. In concluding the email, Mr Harvey commented:
Tim, please be absolutely certain, I appreciate this situation is an example of white knight behaviours. While the deal has a sound return with minimal risk, I also understand it is of no strategic importance and [Mrs Harvey] and I are deeply grateful to you for doing it. Also have confidence that I will attack this with gusto and achieve CCC with all possible haste without compromising quality.
What else is required for you to confirm your acceptance of the option agreement drafted.
If you need any changes please let me know urgently.
[115]Mr Harvey followed up again later the same day:
Hi Tim,
Can you come back to me re the option agreement, tomorrow urgently.
My wife is extremely upset about this now and I am having massive difficulty in holding it all together.
Normally, she is a stoic pragmatic woman and it is a confluence of circumstances, this not the least of them, that has resulted in her letting rip at me.
I know that is not your problem I just need you to understand why I am pushing this.
What is it that we need to do to get this across the line?
[116]Mr Edney replied on 12 May 2015:
Dear Jason
I now clearly understand why you are interested in solving this situation. To help I am prepared to pay out the current lender and transfer the title into your name taking a first and only mortgage on the property.
I can do that immediately depending on the vendor and my lawyers doing the documentation.
You can then finish the house move and achieve CCC. I understand it will take five months.
I propose to charge you $700 pw paid fortnightly in arrears. And an exit fee.
However if you default in any way you have to offer immediate vacant possession and transfer of the [title] (presigned).
This is a more advantageous outcome for you as long as you do as you say. Do you both want to do it?
Kind regards Tim.
[117] On 13 May 2015, Mr Harvey responded “Thank you very much, that is a load off. [Mrs Harvey] will be thrilled.”
[118] Mr Edney responded on 13 May 2015, referring to an announcement by the Reserve Bank and advising that Mr Harvey should get an update of the bank loan offer that would be available once the bridging period was over. He said he would hate to find out that Mr Harvey could not get a bank mortgage at that point.
[119] Mr Edney said that at about the time of this last email, he told Mr Harvey that the borrower would need to be a company. Mr Edney says that this is because Waimauri was not in the business of making consumer loans. Mr Harvey alleges this was because Mr Edney did not want pt 2 of the CCCFA to apply to their arrangement. Whatever the reason behind it, it is agreed that a corporate entity was required to be the borrower. I return to this aspect later.
[120] On 14 May 2015, Mr Harvey emailed Mr Edney thanking him for “getting this deal done”. PJL was registered as a company later that day. The PJL Loan was then entered into on 15 May 2025.
Analysis of circumstances around entry into the PJL Loan
[121]PJL asserts that:
(a)Waimauri induced the contract by oppressive means;
(b)PJL and the Harveys were not able to reasonably protect their interests means; and and/or
(c)Waimauri subjected PJL to unfair pressure or tactics or otherwise unfairly influenced PJL.
[122] I do not agree. Waimauri was introduced to Mr Harvey through his brother-in-law, who also was assisting negotiating on his behalf. When it seemed Waimauri may be able to assist, Mr Harvey was effusive in his thanks in an email to Mr Edney. Mr Harvey also specifically referred to the risk that Mr Edney was taking on as lender.
[123] The emails show that it is Mr Harvey, not Waimauri or Mr Edney, who wanted to proceed with haste. There was urgency from Mr Harvey’s perspective because the financier wanted to exit quickly. The urgency came from those circumstances, not from pressure applied by Waimauri. Notably, an unconventional “buyback” arrangement proposed by Mr Chevin and Mr Harvey was replaced with more standard bridging finance at Waimauri’s instigation.
[124] The correspondence between Mr Harvey and Mr Edney leading up to the loan demonstrates that Mr Harvey was thrilled for PJL to be granted the PJL Loan. Mr Harvey was fully aware it was bridging finance. He was deeply grateful to Mr Edney for stepping in to provide the opportunity to obtain the property.
[125] I find that at no time did Mr Harvey give any indication that he was coerced into the PJL Loan nor was he subjected to unfair pressure from Mr Edney.
[126] I also accept that in the surrounding correspondence, Mr Harvey presented as someone who is commercially aware and who had taken part in commercial ventures. Although Mr Harvey says that he was suffering from depression or anxiety at the time of entering into the PJL Loan, concerns Mr Harvey raised were more about his wife. The most Mr Harvey ever referred to his own state of mind was when he indicated that his wife was upset with him, and that he was having trouble holding it together as a result. I do not consider that any particular disadvantage was apparent in the way Mr Harvey presented to Mr Edney. The circumstances were evidently stressful, but I do not consider Mr Harvey was exploited. PJL has failed to establish that the
circumstances around entering into the PJL Loan were oppressive as defined by the CCCFA.
The terms of the contract
[127] In its pleading, PJL relies on an asserted comparison between the PJL Loan and the terms of other arrangements. However, this was unsupported by any evidence that the PJL Loan was onerous relative to other bridging finance options.
[128] Nor is further particularisation or evidence provided as to why it is said that the amount payable under the PJL Loan gave rise to any issue of oppression. The initial amount of the PJL Loan is $557,907. On the face of things, there is no element of oppression raised by the amount. The accruing interest is due to PJL’s default.
[129] PJL asserts that the form of the loan is an aspect that justifies the reopening of the contract. Again, no particulars are given. The PJL Loan was drafted with a standard and widely-used template. The annexure schedule terms that were specific to the circumstances are not objectionable. The bridging finance for an initial term of only five months carried risk for the lender, given that it was associated with works being carried out to obtain the necessary CCC, which was in turn required for title to be issued. The risks justified mezzanine interest rates and imposition of penalty interest on default. The base interest rate was 12 per cent and the default rate was 22 per cent. The interest rates appear unobjectionable for such borrowing, but I have no evidence to the contrary in any event, the onus being on PJL to provide it.
[130] As Mr Lenihan submitted, there was a clear exit strategy out of the bridging finance arrangement through the completion of works, obtaining of cross-lease title, and refinancing with a mainstream bank. Mr Harvey expressed supreme confidence to Mr Edney that the works could be completed within the sum provided for them, and the short term of the loan would be sufficient. That confidence proved ill-founded. PJL has failed to establish that matters relating to the terms of the contract are oppressive within the CCCFA. I address separately below the interposition of a corporate borrower.
Consumer credit contract “in substance”
[131] PJL was incorporated to enter into the PJL Loan. Mr Edney said he required this because Waimauri is not a consumer lender. This was lending outside its usual business, with Mr Edney’s connection to Mr Chevin having created the circumstances in which Waimauri and PJL/the Harveys were introduced.
[132] There are four requirements for a loan to be a consumer credit contract under the CCCFA. One is that the debtor must be a natural person.14 Where a contract is a consumer credit contract, the creditor is subject to initial and continuing disclosure requirements.15 There are statutory damages for breaches of these requirements.16
[133] There is no “anti-avoidance” provision in the CCCFA. Accordingly, the fact that Waimauri required the Harveys to incorporate a company as a condition of lending does not turn the PJL Loan into a consumer credit contract and subject to those requirements. The loan is not with a natural person.
[134] Under the re-opening guidelines, the Court is required to consider all the circumstances relating to the making of the contract17 and any other matters the Court thinks fit.18 In my view, the fact that a creditor has stipulated for the interposition of a company to avoid the creditor having to meet consumer credit contract requirements is one circumstance that is relevant within the guidelines. However, it is only one aspect in the mix and the relevance of that aspect will vary.
[135] Here, although the PJL Loan certainly has some of the characteristics of a consumer credit contract (borrowing for a home loan and Mr Harvey’s stated concern for his family), this is not a case where a lender is conducting its business generally to require the interposition of a company to avoid obligations under the CCCFA. There were significant commercial aspects to the loan (the development works and the background that the lending replaced an existing “finance” arrangement). Mr Harvey was being supported by Mr Chevin, an experienced property developer. There is no
14 CCCFA, s 11.
15 Sections 17 and 19.
16 Section 88.
17 Section 124(1)(a).
18 Section 124(1)(p).
evidence that the requirement of a company caused the Harveys any concern. On the facts of the present case, I am not sufficiently satisfied that Waimauri’s requirement for PJL to be interposed constitutes a basis for reopening the contract. In all the circumstances, such a condition was not unreasonable for Waimauri to require.
Oppressive exercise of powers
[136] PJL asserted that all of the circumstances related to the exercise of rights and powers by Waimauri was a ground for reopening. No particulars are given. Nor did Mr Harvey steer me with any clarity to what this embraced. I apprehend that PJL relies on the circumstances relating to the GHL Loan and its operation, the liquidation of GHL and/or to Waimauri’s conduct associated with the Exit Agreement. I have already discussed these earlier. The same reasons apply in substance to why those matters do not constitute an oppressive exercise of Waimauri’s powers under the PJL Loan.
Conclusion on whether to reopen the contract
[137] In my view, considering the matters PJL relies upon cumulatively, PJL has not established that grounds for reopening the PJL Loan/mortgage are made out.
Result
[138]I make an order for possession. Waimauri is entitled to costs.
[139] If costs cannot be agreed, I will receive any submissions in support of costs from Waimauri within 14 days, and any submissions by PJL in reply within another 14 days. I will then determine costs on the papers.
Anderson J
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