Wake Up Commercial Limited v Extension Capital Limited

[2023] NZHC 6

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-1239

[2023] NZHC 6

BETWEEN

WAKE UP COMMERCIAL LIMITED

First Applicant

M J O’BYRNE as trustee of the KRM FAMILY TRUST

Second Applicant

AND

EXTENSION CAPITAL LIMITED

Respondent

Hearing:	17 October 2022
Appearances:	E Morrison for the applicants J Burt for the respondent
Judgment:	10 January 2023

REASONS JUDGMENT OF ROBINSON J

This judgment was delivered by me on 10 January 2023 at 4:00pm pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Solicitors:

K3 Legal, Auckland

Vince & Rice, Auckland

Counsel:
J Burt, Auckland

WAKE UP COMMERCIAL LIMITED v EXTENSION CAPITAL LIMITED [2023] NZHC 6 [10 January 2023]

Introduction

[1]    On or about 4 November 2021 the plaintiff, Wake Up Commercial Limited (Wake Up) entered into agreement with the defendant to borrow $2,350,000 for two months. The loan was to enable Wake Up to purchase a property at Leybourne Circle, Glen Innes, Auckland. The plaintiff wished to purchase the Leybourne property in order to develop it. The intended development would require Wake Up to obtain additional finance.

[2]    The second plaintiff (Ms O’Byrne) is the sole director of Wake Up and trustee of the KRM Family Trust. As trustee she guaranteed Wake Up’s obligations to the defendant, and granted the defendant a mortgage over a property in Casement Road, Whangamata.

[3]    On 1 February 2022 Wake Up purchased the Leybourne property. But it did not obtain the additional finance required to develop it. It defaulted on the loan. On 11 July 2022 Wake Up sold the Leybourne property for $1,635,000 and paid the net sale proceeds to the defendant in partial repayment of the loan. A significant shortfall remains.

[4]    The defendant has issued notices under the Property Law Act 2007 to enforce the mortgage over the Whangamata property.

[5]    Wake Up and Ms O’Byrne apply for an interim injunction restraining the defendant from taking enforcement steps or exercising its powers of sale over the Casement Road property. Essentially, the plaintiffs say that:

(a)when Wake Up agreed to the  terms  of  the  $2,350,000  loan  (and Ms O’Byrne agreed to guarantee that loan) they relied on representations from the defendant that it would also provide the additional finance required to develop the Leybourne property; and/or

(b)without development finance in place, the Wake Up would inevitably default on the $2,350,000 loan which was therefore oppressive in terms of the Credit Contracts and Consumer Finance Act 2003 (CCCFA).

[6]    On 16 December 2022 I issued a judgment declining the plaintiffs’ application. These are the reasons why.

Procedural history

[7]    Wake Up and Ms O’Byrne initially applied for the interim injunction without notice to the defendant. On 27 July 2022 the Moore J granted the injunction on that basis.1 In doing so directed his Honour directed the matter be set down for mention  in the Duty Judge list to consider “…whether the interim injunction should be sustained, amended or revoked…”.2

[8]    When the matter came before Edwards J (as Duty Judge) she noted that the defendant opposed the continuation of the injunction, and that the application would need to be heard de novo.3 Justice Edwards set the matter down for a hearing on 17 October 2022 and made timetable orders for the exchange of evidence and submissions.

Causes of Action

[9]    Although the plaintiffs sought to obtain injunctive relief without notice on 27 July 2022, they did not file their statement of claim in this proceeding until 10 October 2022, one week before the hearing of this application. Counsel for the defendant,

Mr Burt, was understandably critical of this delay.4

[10]   In their first cause of action the plaintiffs seek relief under the CCCFA, including re-opening the $2,350,000 loan on the basis that its terms are oppressive. Amongst other things they allege that: Wake Up would inevitably default on the

$2,350,000 loan without the additional development loan; the $2,350,000 loan was contingent on the development loan being offered but no replacement loan was provided; Wake Up acted inconsistently with reasonable commercial practices and

1      Wake Up Commerical Limited & O’Byrne v Extension Capital Limited [2022] NZHC 1824.

2      At [23(e)]. It will be apparent that in reaching my conclusions I had the benefit of evidence and careful legal submissions that were not available to Moore J on 27 July 2022.

3      Wake Up Commerical Limited & O’Byrne v Extension Capital Limited [2022], Minute of Edwards J, 4 August 2022 at [2].

4      No orders pursuant to r 7.53(2)(a) of the High Court Rules 2016 for the commencement of the proceeding appear to have been made (or sought) when the without notice injunction was granted.

therefore oppressively in providing a loan that would inevitably default; and the defendant did not consider its responsible lending obligations.

[11]   The second cause of action is headed “Misleading and Deceptive Conduct” but appears to be based on estoppel principles. The plaintiffs allege that:

69  (c) In providing financial services, [the defendant] knew or should have known that the plaintiffs would rely upon [the defendant’s] representations in assessing the viability and / or feasibility of the development of the Leybourne Property.

70The defendant failed to provide the development loan to the plaintiffs.

71         It was reasonable for the plaintiffs to rely on [the defendant’s] representations that the development loan would be provided.

72         The plaintiffs relied upon [the defendant’s] representations to its detriment:

(a)WUC has been deprived of its interest in the Leybourne Property;

(b)WUC has been deprived of the potential to profit further from those interests; and

(c)KRM Trust’s interest in Casement Property is at risk.

Legal Principles

[12]   The relevant legal principles are well established and not in dispute. The Court must assess:5

(a)whether there is a serious question to be tried;

(b)the balance of convenience; and

(c)where the overall justice lies.

The without notice orders

[13]   Although the hearing before me was de novo, it is worth noting Moore J’s reasons for granting the injunction without notice. Justice Moore recorded that:

5      Intellihub v Genesis Energy Ltd [2020] NZCA 344 at [23].

[4] The applicants’ position is that the loan was intended to finance the purchase of the Leybourne property in the short-term only, on the understanding that Extension Capital would offer a second loan for the purpose of funding the long-term development of the Leybourne property site. The applicants argue that no development loan followed, and the terms of the short-term loan meant that default was inevitable. Their position is that the loan was oppressive and usurious. On that basis they seek an interim injunction.

…

[15]    The applicants claim that Extension Capital agreed to provide the subsequent development loan. Whether that is the case may well turn on the credibility of witnesses.

[16]    If that is the case, then it is arguable that Extension Capital’s conduct in seeking to enforce the loan is oppressive. The terms of the loan taken at face value, and the financial position of Wake Up at the time the loan was issued, are such that it appears Wake Up could never have met its liability. It would have to repay a loan covering the entire purchase price of a property development (plus further fees) within a timeframe where it would be impossible to complete that development and realise any profit. Without obtaining a development loan the only realistic way it could meet its liability would be through the sale of the collateral.

[17]    I therefore consider that there is a serious question to be tried.

[14]   Justice Moore went on to find that the balance of convenience supported the granting of an injunction. He recorded the plaintiffs’ submission that an exercise of the power of sale over the Casement Road property would result in Ms O’Byrne losing her family home, which is also her only significant asset.6

Evidence

[15]   Ms O’Byrne filed a lengthy affidavit in support of her without notice application.

[16]   In support of its opposition the defendant has filed affidavit evidence from: Timothy Zonneveld, the sole director and shareholder of the defendant; Benjamin Pauley, the sole director of Lateral Partners; and Darpan Patel, a director and shareholder of ASAP Finance Limited.

6      Wake Up Commercial Ltd & O’Byrne v Extension Capital Ltd at [18] and [21].

[17]   In reply Ms O’Byrne provided a second affidavit, and filed affidavits from Timothy Sullivan, a construction project manager and director of LT Projex; and Glen McLeod, a registered Financial Services Provider and sole director of Edge Financial Services Limited.

Background

[18]   In her supporting affidavit Ms O’Byrne explains that she made the decision to purchase and develop the Leybourne Road property with the assistance of Richard Goodall. Mr Goodall is a financial adviser who had been working with Ms O’Byrne since 2017, helping her  plan for retirement.   Ms O’Byrne deposes that  she and    Mr Goodall got on very well and that as their professional relationship developed, he became a trustee of her trust (that is the KRM Family Trust) from 7 October 2018.

[19]   Ms O’Byrne explains that she and Mr Goodall had many discussions about the financing and feasibility of the development of the Leybourne property. She says that Mr Goodall introduced her to a contractor, Latitude Homes Limited (Latitude Homes), as well as a mortgage broker, Lateral Partners Limited (Lateral Partners). She says Mr Goodall had most of the dealings with Latitude Homes.

[20]   On 3 November 2021, following the  auction  of  the  Leybourne property, Ms O’Byrne made an offer to purchase it for $2,350,000. The offer was accepted. Ms O’Byrne says she made the offer in reliance on Mr Goodall’s advice that finance had been secured. Ms O’Byrne says the defendant paid the deposit of $117,500. She says she thought it was odd the defendant had lent the money for the deposit before she had received or signed any loan documents. She says this reflected the easy nature between Mr Goodall and his contacts.

[21]   Ms O’Byrne explains that on 3 November 2021 she also received a loan offer for funding of $2,350,000. She says that Mr Goodall sent her the offer and advised that it was okay to sign. She says Mr Goodall told her that the loan would be replaced by another loan that would cover the development of the property. Ms O’Byrne says that she signed the loan offer relying on Mr Goodall’s expertise, experience and advice.

[22]   On 4 November 2021 Ms O’Byrne’s former solicitors received loan documentation from the defendant. Initially the trustees of the KRM Family Trust were to be the borrowers, but the documents were amended to record that Wake Up would be the borrower with the trustees becoming guarantors. On 9 November 2021 Ms O’Byrne’s solicitors  received  amended  loan  documentation  to  this  effect.  Ms O’Byrne says she signed these documents during a Facetime call on 10 or 11 November 2021 (Covid-19 restrictions preventing face-to-face meetings at that time).

[23]   As noted above, the loan was for $2,350,000. The term was for one month from settlement of the purchase of the Leybourne property that was then scheduled for 10 January 2022. No interest was payable in the first instance, but there was an establishment fee of $110,000. This was payable in two equal instalments. The first had been capitalised when the deposit was paid. The second was to be paid when the funds were drawn down to settle the purchase of the Leybourne property.

[24]   The facility documents were signed by Ms O’Byrne in her capacity as sole director of Wake Up; and by Ms O’Byrne and Mr Goodall as trustees of the KRM Family Trust.7 Ms O’Byrne says that  when  she  signed  the  loan  facility  neither Mr Goodall nor her solicitors advised her it was for a two-month term: “I relied solely on the professional advice of Richard [Goodall] and Neilson’s and Richard’s reassurances of a replacement loan and signed the loan documents”. She says that she told her solicitors that Mr Goodall had fully explained the loan documentation to her.

[25]   On 8 November 2021 (that is two days before Ms O’Byrne signed the loan documentation) Mr Pauley from Lateral Partners emailed Mr Goodall requesting information required “to get the development application underway ASAP.” The information required included: the Resource Consent; Building Consent; Plans; Detailed Feasibility; and confirmation that Latitude would be the builders and on a Fixed Price Contract.

[26]   On 9 November 2021 at 9.47 am Mr Goodall forwarded this to Ms O’Byrne explaining that: “This is to make sure we have all the development approval ready to go as soon as we have settled on the land purchase”. He asked Ms O’Byrne if she had

7      Mr Goodall has subsequently resigned as a trustee of the KRM Family Trust.

the Building Consent plans. At 9.50 am Ms O’Byrne replied: “I have to get Sam to get the building consents plans [sic] done without the water marks Todd said”. This is a reference to Todd Falgate from Latitude Homes.

[27]   Mr Pauley’s affidavit exhibits an email response from Mr Goodall sent at 9.57am, copying Ms O’Byrne. Mr Goodall attached some of the documents sought; advised what further information he would provide; and explained that Ms O’Byrne would meet with Latitude Homes next week “to discuss finalising the costings”.

[28]   On 10 November 2021 at 9.54 am Mr Falgate from Latitude Homes emailed Ms O’Byrne and Mr Goodall as follows:

Hi All – After a discussion with Michelle, we all need to get together to go through Project planning for 135 Leybourne Circle, Glen Innes to go over the following:

1.Timing

2.Subdivision

3.Services – Watercare, Chorus, Vector

4.Geotech Report & Works Over Approval

5.Vehicle crossing approval

6.Funding

[29]   Ms O’Byrne followed up Mr Falgate in an email she sent on 31 December 2021 at 6.54 am: “Hi Todd, I trust you are having a well deserved break. Todd where are we at with pricing please?”

Extension of loan - purchase of Leybourne property

[30]   Wake  Up’s  purchase   of   the   Leybourne   property   was   to   settle   on  10 January 2022 or five working days after the Building Consents were issued, which ever was latest. The Building Consents were issued on 21 January 2022. In an Extension Letter dated 28 January 2022 Wake Up and the defendant agreed to vary the terms of the loan to provide that: the Settlement Date would be 2 February 2022; and the Maturity Date would be 10 March 2022. An Establishment Fee of $110,000 was reduced to $55,000 but an extension fee of $20,000 was charged.

[31]   In the end settlement occurred on 1 February 2022. Wake Up drew down the balance of the loan in order to settle the purchase of the Leybourne property.

[32]   On 2 February 2022 at  9.23am  Mr  Pauley  of  Lateral  Partners  emailed  Ms O’Byrne and Mr Goodall. He asked for an update on the material he had asked Mr Goodall to provide in his email of 8 November 2021, including the Build Contract. He advised:

Hi Michelle & Richard

I just wanted to reach out to stress the importance of getting the below sorted ASAP so that we can secure the finance for the development.

As you are aware Richard the non-bank finance market is very tight at the moment and it is crucial that we keep some momentum behind this application.

Can you please provide an update on the following:

·Building Consent (I believe issued – can you please provide a copy).

·Build contract.

·QS Report

·Valuation (As Is and As if Complete).

·Pre-Sales (are the end units on the market?).

We have just over a month to secure the refinance and ideally the majority if not all the above will be addressed within the next 2 weeks to ensure sufficient time to secure the finance.

Any questions please sing out.

[33]   Three minutes later, at 9.26am, Ms O’Byrne emailed Mr Falgate asking in forthright terms for her build quote. She threatened Mr Falgate: “If I miss out on finances (sic) because you guys have taken forever I will be getting lawyers involved.”

[34]   At 9.51am Mr Falgate advised Ms O’Byrne: “I have been talking with Richard and we may not be in a position to build this job for you.” To which Ms O’Byrne responded: “Why is that? And why tell me now. This will cause me to go broke.”

[35]   On 17 February 2021 the defendant wrote to Wake Up and its solicitors confirming that the loan would fall due on 10 March 2021 and advising that no further

extensions would be available. Ms O’Byrne deposes that she “suddenly became very concerned that I was being told the loan would expire before I had received the replacement or development loan”.

[36]   Ultimately, Wake Up did not secure finance to develop the Leybourne property and/or to refinance the loan from the defendant. Matters between Ms O’Byrne and Mr Goodall appear to have become somewhat acrimonious. On 1 March 2022 solicitors acting for Wake Up and Ms O’Byrne wrote to Mr Goodall suggesting that he alone had arranged finance for Wake Up’s purchase of the Leybourne property and failed to disclose to Ms O’Byrne that the loan from the defendant was only a bridging loan. They also alleged that Mr Goodall may have breached his fiduciary duties as a trustee of the KRM Family Trust, including by personally obtaining benefits in relation to the property transaction.

[37]   Mr Goodall’s solicitors replied on 8 March 2022. Amongst other things they denied that Mr Goodall had solely arranged the finance and asserted that Ms O’Byrne was aware of all the relevant loan terms, including that it was only a two-month bridging loan.   They refer to discussions and correspondence in  which they say    Ms O’Byrne was informed that Mr Goodall’s company would receive a fee for arranging the finance. They advised that Mr Goodall wished to retire as a trustee of the KRM Family Trust.

[38]   In accordance with its terms the loan fell due on 10 March 2022. On 22 March 2022 the defendant’s solicitors issued Wake Up with a Property Law Act Notice (PLA Notice). On 3 May 2022 the defendant issued a further PLA Notice against the trustees of the KRM Family Trust.

[39]   On 11 July 2022 Wake Up sold the Leybourne property for $1,650,000. The net sale proceeds were paid to the defendant but as noted above a substantial shortfall remains. On the same date the defendant’s solicitors advised Ms O’Byrne that the PLA Notice issued against the trustees of the KRM Family Trust had expired unremedied, and that the defendant intended to exercise its power of sale of the Whangamata property. The plaintiffs applied without notice for the interim injunction that was issued by Moore J on 27 July 2022.

Is there a serious issue to be tried?

[40]   As noted, the plaintiffs’ claims are essentially that: the defendant represented that as well as providing the $2,350,000 loan to enable Wake Up to purchase the Leybourne property it would provide additional finance to enable Wake Up to develop the Leybourne property; and that without that development finance the $2,350,000 loan was  oppressive because it would inevitably default.  Counsel  for Wake  Up,  Mr Morrison, submits that without development finance in place Wake Up had no “exit strategy”, and that in those circumstances it was oppressive for the defendant to provide Wake Up with the two month “bridging loan”.

Issue - Did the defendant represent that it would provide development finance?

[41]   I do not consider the evidence before me discloses a serious issue as to whether the defendant represented to the plaintiff that it would provide Wake Up with additional development finance. The contractual documentation (including the Extension Letter) that Ms O’Byrne signed as sole director of Wake Up makes it clear that the loan was a short-term loan to enable Wake Up to purchase the Leybourne property, and that this would ultimately need to be repaid by 10 March 2022.

[42]   Ms O’Byrne does not say in evidence that anyone on behalf of the defendant made representations directly to her that it would also provide the finance required to develop the Leybourne property. On the other hand, Mr Zonneveld clearly states that he had no direct contact with Ms O’Byrne or Mr Goodall. Ms O’Byrne does not challenge that evidence in her reply affidavit. Ms O’Byrne’s evidence is that she relied solely on the advice of Mr Goodall (who was her financial adviser and co-trustee); and her former solicitors.

[43]   Mr Goodall has not given evidence. However, Mr Pauley’s email to him of 8 November 2021 makes clear that Wake Up would need to provide further information in order to progress the application for development finance. Mr Goodall had forwarded that email to Ms O’Byrne before she signed the loan documentation. She received subsequent correspondence directly from Mr Pauley requesting again the information required to progress the application for development finance. She followed matters up with Mr Falgate at Latitude Homes with correspondence making

clear that she would look to remedies against him if his delays caused Wake Up to miss out on the development finance it still required.

[44]   There is no evidence before me of Ms O’Byrne (or Mr Goodall) having suggested to the defendant at this stage that it had already agreed to provide development finance.

[45]   In these circumstances I do not consider the evidence is sufficient for present purposes to suggest that the defendant represented to the plaintiffs that it would provide development finance. I accept Mr Burt’s submission that Messrs Zonneveld and Pauley’s undisputed evidence is that no such representation was made, and that their evidence is supported by the contemporaneous record.

Oppression - CCCFA

[46]   In its first cause of action the plaintiffs allege that the terms of the defendant’s loan to Wake Up are oppressive and should be re-opened pursuant to s 120 of the CCCFA.

[47]   To some extent this cause of action also relies on the allegation that the defendant failed to provide a further development loan. To the extent that the causes of action overlap in this way I have dealt with those allegations above.

[48]   The plaintiffs also allege that the defendant breached its responsible lending obligations. They say that the defendant did not give consideration to responsible lending obligations which is inconsistent with reasonable commercial practices. It says that the bridging loan (and the defendant’s attempts to enforce it) are oppressive because the defendant failed to consider how Wake Up would repay the loan which would inevitably default without a further development loan.

[49]I do not consider there is a serious issue to be tried.

[50]   First, the plaintiffs’ attempts to invoke the responsible lending principles and the Responsible Lending Code provided for in Part 1A of the CCCFA are misplaced. Those principles and the code only apply in respect of consumer credit contracts and

to transferees under buy-back transactions. 8     The loan in this case is a commercial loan to which Part 1A of the CCCFA does not apply.

[51]   Secondly, Ms O’Byrne says that she relied throughout solely on professional advice from Mr Goodall and from her and Wake Up’s former solicitors. The documentary record confirms that the plaintiffs had legal advice throughout. The plaintiffs are of course free to pursue any remedies they might have against their professional advisers. But I do not consider the evidence before me reveals any reason why the defendant was not entitled to proceed on the basis that the plaintiffs were properly advised and fully informed.9

[52]   Thirdly, Mr Zonneveld deposes that he did consider Wake Up’s repayment strategy, and that on the basis of information provided to him he was comfortable that Wake Up was well placed to obtain development finance, the proceeds of which would be used to repay the defendants. Moreover, Mr Pauley deposes that he had in fact made progress securing development finance for Wake Up, but required it to provide information – including a valuation, a building contract, a quantity surveyor report and a pre-sales schedule – in order to obtain that finance. Despite requests, Wake Up did not provide that information.

[53]   Significantly,  in  her  reply  affidavit  Ms   O’Byrne  does   not   challenge Mr Pauley’s evidence in this regard. And as I have noted above her correspondence with Mr Falgate on 2 February 2022 tends to show she understood that the information she had been waiting to receive from him was needed to arrange development funding.

[54]   In those circumstances I accept Mr Burt’s submission that the evidence does not disclose a serious issue to be tried as to whether default was inevitable, or that the defendant’s loan was an oppressive credit contract because there was no “exit strategy” for Wake Up.

8      Consumer Contract and Credit Finance Act 2003, s 9C and definition of “lender” in s 9B.

9      GE Custodians v Bartle & Ors [2010] NZSC 146 at [48].

Disclosure

[55]   In their Statement of Claim dated 10 October 2022 the applicants also allege that the loan is oppressive because the respondent failed to disclose that Mr Zonneveld has an indirect ownership interest in Lateral Partners which brokered the loan.10 The applicants say that the respondent’s and Lateral’s failure to disclose this is inconsistent with reasonable commercial practice.11 They allege that because of this connection the brokerage fee paid to Lateral effectively amounted to a further payment to the respondent.12

[56]   In his affidavit of 15 August 2022 Mr Zonneveld acknowledges that he has a beneficial interest in 40% of the shares in Lateral Partners but says he is not a director and has never worked in the business of that company.

[57]   The applicants allege further that despite requests the respondent has failed to provide full disclosure of the fees and interest charged;13 and of its “compliance of responsible lending obligations”.14

[58]   As set out at paragraph [50], the responsible lending obligations and the Responsible Lending Code contained within the CCCFA do not apply to the commercial loan between Wake Up and the respondent. As such the respondent cannot be required to provide disclosure in relation to any such obligations. As for the fees charged, these appear to have been fully set out in the contractual documentation including the Extension Letter pursuant to which they were varied and reduced. I do not consider there is a serious issue to be tried in relation to these matters.

[59]   Nor do I consider that the evidence reveals a serious issue to be tried arising out of the alleged non-disclosure of Mr Zonneveld’s beneficial ownership interest in 40% of the shares in Lateral Partners. Regardless of whether this is something the respondent should have disclosed to Wake Up, there is no evidence to suggest that Wake Up would not have entered into the loan with the respondent if the matter had

10     Statement of Claim, paras 6 and 65(k).

11     Statement of Claim, para 65(m).

12     Statement of Claim, para 65(l).

13     Statement of Claim, para 65(g).

14     Statement of Claim, para 65(h).

been disclosed. Ms O’Byrne makes no mention of the matter in her original affidavit and in her reply affidavit says only that “it is concerning to me as to the relationship between Lateral Partners Limited and [the respondent]”. In any event, I do not consider that any non-disclosure of these matters by the respondent would relieve Wake Up or the trustees of the KRM Family Trust of their repayment obligations.

Balance of Convenience

[60]   The plaintiff’s primary submission concerning the balance of convenience is that unless the injunction is maintained their substantive proceeding will largely be rendered nugatory, and Ms O’Byrne will irreversibly lose her family home which is currently held on trust  for beneficiaries including Ms O’Byrne and her  children.   Mr Morrison submits that there is, therefore, a serious risk of injustice towards each of the applicants in respect of which, in the case of Ms O’Byrne in particular, damages will not be a sufficient remedy.

[61]   The difficulty with this submission is that when Wake Up applied for finance in November 2021 the Whangamata property was an investment property valued at

$1.2m and rented at $350 per week. Ms O’Byrne listed it as such in the information she provided in support of Wake Up’s loan application.15 At that time Ms O’Byrne was living in Auckland. Her evidence is that she moved into the Whangamata property on 14 April 2022. By that time the loan was in default and the defendant had commenced enforcement action. As noted above, the defendant issued PLA Notices against Wake Up on 22 March 2022, and against Ms O’Byrne as trustee on 3 May 2022.

[62]   This important evidence does not appear to have been before Moore J. In her first affidavit sworn on 22 July 2022 Ms O’Byrne deposed that she lived at the Whangamata property. Mr Zonneveld exhibited Wake Up’s loan application to his affidavit sworn on 15 August 2022 so that was not before Moore J. It was only in reply that Ms O’Byrne confirmed when she had moved into the Whangamata property.

15     Ms O’Byrne had indicated the Whangamata property was worth $1.5m, but a registered valuation also prepared in support of Wake Up’s loan application valued the property at $1.2m.

[63]   In any event, in circumstances where the plaintiffs proffered the Whangamata property as security on the basis that it was an income earning investment property, and Ms O’Byrne only moved into the property after enforcement processes were underway, I accept Mr Burt’s submission that this case is materially different from those in which the Court must assess the balance of convenience on the basis that the secured property is a family home. There is also merit in Mr Burt’s submission that Ms O’Byrne is a party to the proceedings only in her capacity as a trustee of the KRM Family Trust, and that from the trust’s perspective it will suffer only a financial loss if the interim injunction is not granted. As such, damages would be an adequate remedy.

[64]   I also take into account that as at 15 August 2022 (when Mr Zonneveld swore his affidavit) the debt owed to the defendant was $1,150,391.36, with interest continuing to accrue at the rate of $781.52 per day. The Whangamata property was valued at $1.2m in October 2021. In those circumstances the net proceeds of sale may well be insufficient to discharge the secured debt (including costs).

[65]   For these reasons I do not consider that the balance of convenience is in favour of granting (or continuing) the injunction sought.

Overall Interests of Justice

[66]   Standing back I do not consider it is in the overall interests of justice to grant (or continue) the injunction. As well as the matters referred to above I also note that:

(a)Wake Up is a corporate borrower that entered into the loan in order to fully fund the acquisition of a property it intended to develop for profit.

(b)Wake Up and Ms O’Byrne were financially and legally advised throughout.

(c)Wake Up’s only asset was the Leybourne property, and the KRM Family Trust’s only asset of significance appears to be the Whangamata property. As such Wake Up’s and Ms O’Byrne’s undertaking as to damages is of limited value (if any).

Result

[67]   For these reasons I declined the plaintiffs’ application for an interim injunction and rescinded the orders granted by Moore J. Counsel will file memoranda in relation to costs.

Robinson J