Wallace Corporation Limited v Gross
[2023] NZHC 2731
•29 September 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-2414
[2023] NZHC 2731
BETWEEN WALLACE CORPORATION LIMITED
Plaintiff/Applicant
AND
ILAN GROSS
Defendant/Respondent
Hearing: 19 June 2023 Appearances:
N Moffatt and I Shores for the Plaintiff/Applicant K Puddle for the Defendant/Respondent
Judgment:
29 September 2023
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 29 September 2023 at 4 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Wynn Williams, Auckland TWA Legal, Auckland
WALLACE CORPORATION LIMITED v GROSS [2023] NZHC 2731 [29 September 2023]
Table of Contents
Introduction [1]
Summary judgment principles [10]
Factual background [12]
Preliminary issue — leave to file further evidence in response to plaintiff’s reply evidence [35]
Is it reasonably arguable that the actions (or inaction) of WCL in relation to the proposed sale to Petra provide a defence? [42] Is a defence relying on the “prevention principle” reasonably arguable? [50] Terms of the Guarantee [51]Is it reasonably arguable that WCL did take control of Podular? [70] Is it reasonably arguable WCL actions or inactions prevented the sale from happening? [108]
If the sale had happened, would there have been money owing by Podular and
therefore Mr Gross under the Guarantee? [110]
Conclusion on defence based on the “prevention principle” [112]
Further available defences [114]
Result [120]
Costs [121]
Introduction
[1] The plaintiff, Wallace Corporation Limited (WCL), seeks summary judgment against the defendant under a guarantee. The defendant, Mr Ilan Gross, was the founding director of Podular Housing Systems Limited (Podular) and at all material times held more than three quarters of the issued shares.
[2] This case concerns the final months of Podular’s existence prior to liquidation. In early September 2022, Mr Gross asked WCL to provide him with a personal loan so he could provide additional funding to Podular for its prefabricated building business. WCL agreed but required the loan to be provided to Podular directly and for Mr Gross to provide a guarantee.
[3] WCL therefore entered into a loan agreement with Podular in September 2022 under which WCL, as lender, agreed to make advances of up to $500,000 (Loan Agreement). On the same date, Mr Gross personally entered into a deed of guarantee (Guarantee). Lumen Business Solutions Limited (Lumen), a company of which Mr Gross was the sole director and his son the sole shareholder, entered into a further deed of guarantee on 4 November 2022.
[4] Between 15 September 2022 and 22 November 2022, WCL says it lent a total of $1,196,709.04 to Podular. WCL alleges that in procuring funds over and above the initial loan amount of $500,000, Mr Gross advised on 6 October 2022 that he was now “managing director” of Podular and that WCL had the benefit of his personal guarantee.
[5] On 25 November 2022 Mr Gross placed Podular into liquidation, three days after WCL’s alleged final advance to Podular. The appointment of liquidators constitutes an event of default under the Loan Agreement. As a result, WCL made demands for repayment of all amounts outstanding. No payment was made in response.
[6] WCL has filed this proceeding seeking to recover from Mr Gross under the Guarantee. An application for summary judgment was filed together with the proceeding on the basis that Mr Gross has no defence to WCL’s claims under the Guarantee.
[7]Mr Gross opposes summary judgment on the following grounds:
(a)the Guarantee is unconscionable and unenforceable including because of the defendant’s dyslexia and language difficulties, misrepresentations as to the nature and effect of the Guarantee, the defendant’s lack of independent legal advice and other issues in the execution of the Guarantee; and
(b)to the extent that the Guarantee is enforceable (which is denied) the defendant has claims against the plaintiff relating to the plaintiff’s mismanagement of Podular and its sale to a third party, Petra Group (Petra) which exceed, set-off or extinguish the amounts claimed under the Guarantee.
[8] Because this is an application for summary judgment the overarching issue is whether the defences advanced by Mr Gross are reasonably arguable. It is only if WCL can establish that they are not that WCL is entitled to summary judgment.
[9] I begin by setting out the relevant legal principles and factual background before discussing a preliminary evidential issue and then the defences relied on.
Summary judgment principles
[10] Rule 12.2(1) of the High Court Rules 2016 provides that summary judgment may be granted where a plaintiff satisfies the court that the defendant “has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.”
[11] The principles applying to summary judgment applications are well established with the leading authority, Krukziener v Hanover Finance Ltd, setting out the principles as follows:1
(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried.2
(b)The court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.3
(c)The court will not normally resolve material conflicts of evidence or assess the credibility of deponents. However, it need not accept uncritically evidence that is inherently lacking in credibility, as, for example, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable.4
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].
2 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.
3 MacLean v Stewart (1997) 11 PRNZ 66 (CA).
4 Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341.
(d)In the end the court’s assessment of the evidence is a matter of judgment. The court may take a robust and realistic approach where the facts warrant it.5
Factual background
[12] Mr Gross incorporated Podular in July 2020. At the time of incorporation, Mr Gross was a 50 per cent shareholder and the sole director. Charles Lewis Innes was the other 50 per cent shareholder. Mr Innes was appointed as a director on 1 September 2020 and Mr Gross ceased being a director on 2 February 2021. Mr Gross deposes that as he invested more money into Podular, his shareholding increased. By the time of these proceedings, he held 95 per cent of the shares.
[13] Podular was incorporated to design and build prefabricated housing. It operated two factories, one in Hamilton and one in Christchurch. Houses were built in the factories and then shipped to site for assembly.
[14] Mr Gross’ evidence is that Podular had very high overheads because of its two factories and having to incur the costs of buying building materials and paying staff. Mr Gross says however that he believed Podular would be a success and invested considerable sums of money into it, both personally and through Lumen, because it had a good flow of work and its profit margin was around 40 per cent.
[15] Mr Gross and Lumen held first and second ranking general security agreements (GSAs) as security for the sums advanced. Mr Gross is the director and chief executive officer of Lumen which operates as a software development company. Mr Gross’s son, Daniel Gross, is the sole shareholder of Lumen.
[16] Mr Gross says he was introduced to James Wallace from WCL in mid-2022 through Jonathan Prasad. In early September 2022, Mr Gross asked Mr Wallace if WCL would advance a personal loan to him for the purposes of providing further funding for Podular. The plaintiff declined to do this, and instead proposed a loan directly to Podular, guaranteed by Mr Gross. Mr Gross’ evidence is that WCL
5 Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
represented to him that the purpose of the Guarantee was to obtain the benefit of Mr Gross’ existing GSA over Podular, and security over his shares. Mr Gross claims that it was not intended to be an unlimited guarantee covering all of Podular’s indebtedness to WCL but instead effectively an assignment of Mr Gross’ security interest over Podular. Mr Wallace and Rodger Hatrick-Smith dispute this in their evidence for WCL.
[17] On 15 September 2022 the following documents were sent to Mr Gross by Wynn Williams, the solicitors for WCL:
(a)Loan Agreement;
(b)Guarantee;
(c)share mortgage;
(d)waiver of legal advice; and
(e)share transfer (under the share mortgage).
[18] Mr Gross says the documents were sent to him at 1.35 pm on 15 September 2022 and were signed through DocuSign at 4.14 pm on the same day. He states that he does not recall signing the waiver of legal advice or share transfer form and the only copies he has of these documents are unsigned.
[19] The loan between the plaintiff and Podular was unsecured. This appears from email correspondence between Mr Wallace and his solicitor to have been an oversight.
[20] There are two versions of the Guarantee in the evidence, one dated 15 September 2022 and another dated 23 September 2022. There does not appear to be any difference in the terms included in the two versions except for the date and Mr Wallace’s signatures appear different. In the guarantee dated 15 September 2022, his signature is witnessed by Stephen Lowe from Wynn Williams, whereas on 23 September 2022, his signature is witnessed by Jaimee Young. Mr Gross’ signatures are unwitnessed on both guarantees. There are also two versions of the Loan
Agreement, again dated 15 September 2022 and 23 September 2022 respectively, both of which are signed by Mr Gross instead of Mr Innes, the sole director of Podular at the time and despite Mr Innes’ name being printed on both versions of the agreement. Mr Gross’ signatures are, again, unwitnessed.
[21] Mr Gross says that the solicitor for WCL followed up with Mr Gross for his signature to be witnessed saying that a witness was required for the Guarantee and share mortgage “to be valid”.
[22] WCL however advanced the loan totalling $495,500 to Podular in two tranches on 15 September 2022 and 21 September 2022 without Mr Gross’ signature being witnessed or the waiver of legal advice being signed. Mr Gross confirms in his evidence that he did not receive legal advice prior to signing the documents.
[23] In October 2022, WCL says it advanced another $503,913.04 to Podular in addition to the original $495,500 advanced.
[24] Before advancing further amounts, WCL sought additional security in the form of a guarantee from Lumen and GSAs from both Lumen and Mr Gross. WCL’s solicitors sent the draft guarantee for Lumen to Mr Gross on 3 November 2022. Mr Gross required amendments to the draft, limiting Lumen’s liability to amounts that it had received from Podular in repayment of advances Lumen had made. The guarantee by Lumen was amended to include such limitation. In addition, further handwritten clauses were added, apparently intended to further emphasise this limitation.
[25] On 4 November 2022, Mr Gross signed a waiver of his right to obtain legal advice in respect of both the Lumen guarantee and his original personal Guarantee. WCL submits that there is no evidence of Mr Gross raising any concern in relation to his personal Guarantee at this stage and nor did Mr Gross seek to limit his personal Guarantee in the same way he sought to limit Lumen’s.
[26] From 4 November 2022 to 22 November 2022, WCL alleges that it advanced Podular a further $197,296, making a total of $1,196,709.04 advanced.
[27] During this time, from approximately August 2022, Podular had been in discussions with Petra, an organisation based in Malaysia that was looking to extend into New Zealand. A “heads of terms”, under which Petra was to pay $4 million to purchase Podular (along with another company, Sanders Manufacturing Ltd), subject to due diligence, was signed by Petra on 3 November 2022.
[28] The sale did not proceed for reasons which are disputed between the parties. Mr Gross says it was because WCL took control of Podular but then failed to progress the sale. Mr Wallace’s evidence for WCL is that as far as he understood, Mr Prasad was handling the potential sale to Petra and Mr Prasad was not working for WCL or representing WCL. This is discussed in further detail below.
[29] In any event, the sale did not proceed and Mr Gross put Podular into liquidation on 25 November 2022.
[30] Mr Gross pleads that some of the amounts allegedly advanced by WCL were advanced when WCL was in effective control of Podular and were for the indirect benefit of WCL.
[31] On 28 November 2022 WCL called up all amounts purportedly owing under the Loan Agreement, although the Loan Agreement only provided for a loan of
$500,000.
[32] On 30 November 2022, WCL sent Mr Gross a letter of demand for payment of the “Guaranteed Moneys” by 2 December 2022.
[33] No payment has been made by Mr Gross to WCL under the Guarantee or otherwise.
[34] These proceedings were therefore filed by WCL on 19 December 2022 with an application for summary judgment filed at the same time.
Preliminary issue — leave to file further evidence in response to plaintiff’s reply evidence
[35] The defendant seeks leave to file further evidence in response to the reply evidence filed on behalf of WCL by Mr Wallace and Mr Hatrick-Smith. The further evidence is from Jonathan Prasad, a consultant who has worked with both WCL and Mr Gross, and Amreek Singh Dhillon (Mr Singh),6 the previous CEO of Petra Modular (one of the companies within the Petra Group). The defendant submits that this evidence needs to be filed to correct material inaccuracies in the evidence of Mr Wallace and Mr Hatrick-Smith.
[36] The High Court Rules do not expressly allow for a defendant to file affidavits in reply to a plaintiff’s reply affidavits but that there is a discretion for the Court to grant leave if it is in the interests of justice.7
[37] The further affidavits were filed on 1 June 2023 together with the application for leave and a statement of defence and counterclaim. No opposition to the application for leave was filed but counsel for the plaintiff confirmed WCL objects to leave being granted.
[38] The further evidence was filed one day prior to the date by which the plaintiff’s submissions were due in advance of the summary judgment hearing and considerably after the reply affidavits had been filed on 20 March 2023 and 4 April 2023 respectively. The affidavit of Mr Prasad is relatively lengthy running to 17 pages with 86 pages of exhibits. The affidavit of Mr Singh is only one page and does not have exhibits attached. I record that it would have been preferable for the further affidavits to have been filed earlier.
[39] However, in the circumstances I consider it is still appropriate to grant leave to file the further evidence as it is highly relevant to the summary judgment application as the affidavits provide evidence of WCL’s involvement in the sale of Podular to Petra, a matter relevant to one of the defences raised by Mr Gross, and the evidence is
6 The majority of the documents before the Court refer to this witness as Mr Singh, although some refer to Mr Dhillon. I apologise if there is any error in this approach.
7 Krukziener v Hanover Finance Ltd, above n 1, at [29].
clearly in reply to Mr Wallace and Mr Hatrick-Smith’s evidence. As Hansen J held in
Nelson Lifecare Centre Ltd v Sampson:8
[I]f further affidavits are not allowed to be filed by a defendant, the consequence could be that summary judgment could be entered against the defendant who had a perfectly valid defence. The drafters of the Rules could not have envisaged such possible injustice arising from their strict application. I agree with the Judge in the Allied Mortgage Nominees Ltd case that it is not a practice to be encouraged. However, given the very frailties of human nature, it is inevitable that on occasions both plaintiffs and defendants, or their advisers, will, for some reason, not place relevant material going to the heart of whether or not summary judgment should be granted before the Court in the initial affidavit. It would almost make a mockery of the procedure if too rigid an application of the Rules led to that situation. It is a matter that can be readily and properly controlled by awards of costs, but it is important that all relevant material should be placed before the Court to enable justice to be done between the parties. Furthermore, I take the view of the Rules that they do not prohibit the filing of such further affidavits. They are simply silent in that regard, and in those circumstances, it is quite proper of the Court to invoke r 4 and r 9, in the appropriate circumstances, to allow such further affidavits to be filed on the necessary terms.
[40] The further affidavits in this case have been filed sufficiently in advance of the hearing for the plaintiff to seek leave to file further evidence in response if necessary or to file further submissions, neither of which it has done.
[41] I consider it is in the interests of justice for leave to be granted in these circumstances.
Is it reasonably arguable that the actions (or inaction) of WCL in relation to the proposed sale to Petra provide a defence?
[42] A key defence for Mr Gross is that WCL essentially took control of Podular in its final days and it was only as a result of WCL’s inaction that the sale to Petra did not succeed. Mr Gross’ evidence is that had the sale of Podular to the Petra Group proceeded, WCL would have been paid entirely for its loans.
[43]The terms of the Guarantee include a no set-off clause in the following terms:
5.1Each payment by the Guarantor to the lender under this guarantee is to be made:
(a)free of any restriction or condition; and
8 Nelson Lifecare Centre Ltd v Sampson (1995) 8 PRNZ 376 (HC) at 381–382.
(b)free and clear of and (except to the extent required by law) without any deduction or withholding for or on account of tax or on any other account, whether by way of set-off, counterclaim or otherwise.
[44] Mr Gross’ ability to rely on any set-off or counterclaim in order to defend these proceedings is therefore circumscribed.
[45] Counsel for Mr Gross however relies on an English decision, TMF Trustee Ltd v Fire Navigation, where the borrowers and the guarantor alleged that the lenders caused the borrowers’ inability to reply the loan.9 In that case, the Judge referred to the borrowers relying on the broad “prevention principle”, namely that a party in breach of contract is excused where it has been prevented from performing the relevant obligation by the breach of the other party.10 In TMF Trustee Ltd, the borrowers argued that such a defence is not by way of set-off and so was not prevented by a simple no set-off clause.11 The Judge recognised that the language of a contract could constrain the Court from holding that the prevention principle applied but held after reviewing the authorities that:12
…the prevention principle “excuses” a breach where performance was prevented by the other party’s breach, giving rise to a defence to liability for the breach itself, not merely defence by way of a set-off.
[46] Phillips J held the no set-off clause in that case did not exclude the application of the prevention principle.
[47] Counsel for Mr Gross submits that the same principle ought to apply here as WCL prevented Podular or Mr Gross from concluding the sale to Petra and if the sale had been concluded, there would be no amounts owing. Mr Gross could not then be found liable under the Guarantee.
[48] Counsel for WCL does not dispute the existence of the prevention principle but says it has no application in the present case. This is firstly because WCL vehemently denies that WCL did anything to cause Podular to go into liquidation when it would
9 TMF Trustee Ltd v Fire Navigation Inc [2019] EWHC 2918 (Comm).
10 At [14]
11 At [14].
12 At [42].
not have otherwise. Counsel for WCL accepts that there is a factual dispute on this issue, and it is not a matter that is appropriate for determination on a summary judgment application. WCL submits however that TMF Trustee Ltd can be distinguished as in that case and the cases discussed in it, there had been a repudiatory breach of the loan agreement which prevented the borrower paying back the loan, which is not the case here.
[49] Counsel for WCL further submits that in any event the clear terms of the Guarantee, including the no set-off provision and the indemnity, prevent Mr Gross relying on such an argument. Otherwise, in counsel’s submission, a guarantor could always say that the principal debtor has such a claim, and it would entirely undermine both the scheme of the agreement and the summary judgment process.
Is a defence relying on the “prevention principle” reasonably arguable?
[50] For Mr Gross to be able to rely on the prevention principle, he will need to establish that it is reasonably arguable that the actions of WCL caused Podular’s inability to repay the loan and that this provides a reasonably arguable basis for extinguishing any liability under the Guarantee.
Terms of the Guarantee
[51] The starting position must be to consider the terms of the Guarantee. The operative terms are clauses 2, 3 and 4 which provide:
2.Guarantee
2.1The Guarantor [Mr Gross] unconditionally and irrevocably guarantees to the Lender [WCL] that the Borrower [Podular] will pay the Guaranteed Moneys and comply with all of the Guaranteed Obligations.
2.2The Guarantor's obligations under this guarantee are in addition to and are not in substitution for, to be merged in or prejudiced by any other present or future Security, guarantee or deed held by the Lender in respect of the Guaranteed Moneys or Guaranteed Obligations.
2.3The Lender may resort to any Security granted to it by the Guarantor at any time over any part of the Guarantor's property or assets to meet the Guarantor's liability under this guarantee, unless a Security by its express terms does not apply to this liability.
3.Liability as a principal
3.1The Guarantor will be liable as principal debtor (and not merely a surety) with the Borrower for payment of the Guaranteed Moneys and the Borrower's compliance with the Guaranteed Obligations. The Guarantor's liability does not affect the obligations of the Borrower to the Lender.
3.2If, for any reason whatsoever, any Guaranteed Moneys are not recoverable from the Guarantor on the basis of a guarantee, the Guarantor indemnifies the Lender on demand for all Guaranteed Moneys that the Lender would otherwise have recovered, together with all Costs incurred by the Lender as a result. This indemnity is a continuing, separate and independent obligation, and applies whether or not the Guarantor or the Lender knew or ought to have known about any fact or circumstance which gives rise to a claim under it.
4.Guarantor to pay and perform on demand
4.1The Guarantor will pay the Lender on demand:
(a)the Guaranteed Moneys if the Borrower fails to pay them when they fall due; and
(b)all Costs incurred by the Lender in enforcing or attempting to enforce this guarantee.
4.2If the Borrower fails to comply with any of the Guaranteed Obligations for any reason, the Guarantor will perform those obligations on demand, and indemnifies the Lender for any loss suffered by, and any Cost incurred by, the Lender directly or indirectly resulting from the Borrower's non-performance of any Guaranteed Obligation. This indemnity is a continuing, separate and independent obligation, and applies whether or not the Guarantor or the Lender knew or ought to have known about any fact or circumstance which gives rise to a claim under it.
[52]“Guaranteed Moneys” is defined in cl 1.1 as follows:
(a)The Guaranteed Moneys include all present and future monies owing by the Borrower to the Lender in respect of:
(i)loans, credits or other financial services to, or for the benefit of, or made at the request of, the Borrower;
(ii)all interest and Costs payable by the Borrower to the Lender in accordance with all or any of the Finance Documents;
(iii)any other indebtedness of the Borrower to the Lender, whether or not:
(iv)they are matured, direct or contingent;
(v)they relate to the Borrower alone or to the Borrower jointly or together with any other person;
(vi)they are owed or incurred by the Borrower as principal debtor or as a surety;
(vii)they were owing, payable or incurred before, at the same time as, or at any time after the execution of this guarantee and whether or not any loan agreement, or other Finance Documents were executed before, at the same time as, or at any time after, the execution of this guarantee.
[53]“Guaranteed Obligations” are defined in the same clause as follows:
Guaranteed Obligations means all of the Borrower's (whether alone or jointly with any other person) present and future obligations (or the obligations of any other person, except the Lender) expressed or implied in the Finance Documents, other than obligations to pay Guaranteed Moneys.
[54]“Finance Documents” are defined as:
Finance Documents means all loan agreements, Securities, guarantees and other documents or agreements in relation to any of the Guaranteed Moneys and:
(a)entered into between the Borrower and/or the Guarantor and the Lender, or
(b)given by the Borrower and/or the Guarantor to the Lender, or
(c)entered into between a third party or parties and the Lender, or
(d)given by a third party or parties to the Lender
[55] It appears from the above terms of the Guarantee that it is reasonably arguable that there needs to be an amount owing by Podular before Mr Gross will be liable under the Guarantee. This is because both the definitions of Guaranteed Moneys and Guaranteed Obligations require Podular to owe money or have an obligation that the Guarantor is then required to fulfil. If Podular does not owe money, then it appears Mr Gross may not owe money under the Guarantee or as a principal debtor directly under cl 3.
[56] Furthermore, the indemnity agreed to in cl 3.2 of the Guarantee, as set out above, is restricted to the amount of “all Guaranteed Moneys that [WCL] would otherwise have recovered, together with all Costs incurred by [WCL] as a result.” If
there are no Guaranteed Moneys recoverable then it is reasonably arguable that Mr Gross is not liable under the separate indemnity either.
[57] In these circumstances the no set-off clause does not prevent the argument that the guarantor, Mr Gross, is not liable if Podular does not owe money in the first place. The purpose of a no set-off clause is recognised as being to ensure that sums, which are otherwise due, remain immediately due and payable notwithstanding that there may be other disputes between the parties. Here, however, the submission by Mr Gross on the basis of the prevention principle is that no amount is due by Podular because of a prior breach by WCL. This breach is pleaded in the statement of defence and counterclaim. It is not pleaded as a breach of the Loan Agreement but instead a breach of duties owed by the plaintiff (or plaintiff’s agents) as agent of the defendant and as agent, manager and/or director of Podular. It appears that it could be pleaded as a breach of an implied term of the Loan Agreement not to take steps essentially preventing repayment of the loan. The right to call up the loan under the Loan Agreement arose as a result of liquidation of Podular, with repayment not otherwise due until 17 March 2023.
[58] The no set-off clause does prevent reliance on a counterclaim in the sense that although money is owing to WCL, Mr Gross has a separate claim against WCL that counters the original claim. Counsel for Mr Gross submits that the fact that the no set- off clause refers to there being no right to set off “on account of tax or on any other account” confines the no set-off clause to tax or similar accounts but does not prevent set off of a substantive claim. The clear words of the clause suggest otherwise however, referring to any other account so it is not reasonably arguable that a counterclaim in the usual sense could be relied on. Here, however, in addition to pleading a counterclaim, Mr Gross pleads affirmative defences, including that the claim by the plaintiff is extinguished by the “counterclaim”.
[59] The “counterclaim” as pleaded is that by causing the agreement with Petra not to proceed, any liability owing by Podular to repay the loans is extinguished, along with any liability of Mr Gross under the Guarantee.
[60] In TMF Trustee Ltd, Phillips J refers to an English decision, New Zealand Shipping Co Ltd v Société des Ateliers et Chantiers de France, as one of the early decisions discussing the prevention principle.13 This decision was referred to by the Supreme Court in New Zealand recently in Melco Property Holdings (NZ) 2012 Ltd v Hall as a case frequently cited in relation to the proposition that a party cannot effectively take advantage of the party’s own wrong in considering the ability to terminate a contract.14 The Supreme Court referred to Lord Finlay’s observation in New Zealand Shipping that:15
It is a principle of law that no one can in such case take advantage of the existence of a state of things which he himself has produced.
[61] The Supreme Court refers in a footnote to this as the “taking advantage” principle.16 It also referred to Bensons Property Group Pty Ltd v Key Infrastructure Australia Pty Ltd, again in the footnotes, where the Supreme Court of Victoria (Court of Appeal) referred to the “prevention principle”, describing it as “the conception that a party to a contract must not act in such a way as to prevent the other party from enjoying the benefit of the contract.”17
[62] Melco involved a party, Mr Hall, seeking to rely on a failure by Melco to fulfil a condition to avoid the contract. The Supreme Court held it was reasonably arguable that Mr Hall’s failure to allow access to the property had the necessary material effect on the prospect of fulfilment of the condition.18 The Court held that Mr Hall could not therefore rely on the non-fulfilment of the condition to avoid the contract because of his own default in not allowing access.
[63] It appears, therefore, that whether it is referred to as the “prevention principle” or not, it is accepted by the Supreme Court that there is a general principle as counsel submits on behalf of the defendant in this case.
13 TMF Trustee Ltd v Fire Navigation Inc, above n 9, at [36]; citing New Zealand Shipping Co Ltd v Société des Ateliers et Chantiers de France [2019] AC 1 (HL).
14 Melco Property Holdings (NZ) 2012 Ltd v Hall [2022] NZSC 60, [2022] 1 NZLR 59 at [36].
15 At [36]; citing New Zealand Shipping Co Ltd v Société des Ateliers et Chantiers de France, above n 13, at 6.
16 At [36], n 26; citing Wallace v Herron [2017] NZCA 346 at [49] and [52]; and Savvy Vineyards 4334 Ltd v Weta Estate Ltd [2020] NZSC 115, [2020] 1 NZLR 714 at [84].
17 Melco Property Holdings (NZ) 2012 Ltd v Hall, above n 14, at [38], n 28; citing Bensons Property Group Pty Ltd v Key Infrastructure Australia Pty Ltd [2021] VSCA 69 at [101]–[102].
18 Melco Property Holdings (NZ) 2012 Ltd v Hall, above n 14, at [62].
[64] In terms of the necessary nexus between the alleged default and the prospect of fulfilment of the condition, the Supreme Court held this requires evidence that the default materially affected the prospect of fulfilment of the condition, explaining that in a situation where both parties have materially contributed to some extent to the non-fulfilment of a condition, in other words where the contribution is shared, it will be necessary to construe “material” as meaning “substantial and operating”.19
[65] The Court considered that this was a principled approach consistent with the underlying “New Zealand Shipping principle”, putting the risk where it belongs, namely on the party in default.20
[66] New Zealand Shipping concerned the effect of a provision in a ship building contract that said that if a ship was not ready by a certain date the contract shall become void. Disruptions due to World War I meant the ship builders could not build the ship by the specified date. The ship builders argued the contract was at an end, but the purchaser’s case was that the contract was merely voidable at the option of the purchaser. On the facts it was found there had been no default by the ship builders and so they were not precluded from claiming the contract was void. But the case is still relied on generally for the proposition that a party cannot take advantage of the existence of a state of things which they themselves have produced.
[67] Here, the relevant provision is the provision saying the loan is repayable on insolvency. Rather than avoiding the contract, as in Melco and New Zealand Shipping, WCL is seeking to enforce the contract in a situation where Mr Gross says WCL is in default as its actions led to that insolvency. However, the Supreme Court’s comments in relation to the necessary nexus between default and the ability of the other party to fulfil a condition would appear to apply equally where the Court is considering the ability to comply with the contract itself.
[68]If it is reasonably arguable that:
(a)WCL did take control of Podular;
19 Melco Property Holdings (NZ) 2012 Ltd v Hall, above n 14, at [53].
20 At [53].
(b)WCL’s actions or inactions prevented the sale from happening when it otherwise would have; and
(c)if the sale had happened, there would have been no amounts owing under the Guarantee;
then a defence based on the prevention principle would appear to be reasonably arguable, as Mr Gross submits.
[69]I consider each of the above questions below.
Is it reasonably arguable that WCL did take control of Podular?
[70] From the evidence filed, it appears reasonably arguable that WCL did take control.
[71] On 1 November 2022, Mr Wallace sent an email asking Mr Gross to confirm in writing as the managing director and majority shareholder of Podular and director of Lumen that Mr Gross had:
(a)authorised WCL and/or its designated representatives to be the sole negotiators to finalise the sale of Podular to Petra;
(b)verbally agreed to WCL taking the security over Lumen; and
(c)agreed that WCL and/or its designated representatives would make all and any relevant management decisions and authorise all and any payments made by Podular until the transaction with Petra was completed.
[72] Mr Gross deposes that from that time onwards WCL and Mr Wallace took full operational control of Podular, appointing Mr Prasad as their representative. Mr Gross attaches his email in response on 1 November 2022 which asks a question about Lumen’s GSA, then says “providing we can get money tomorrow to keep the [option] going” and asks whether his personal Guarantee could be removed because of the
Lumen security. Although not entirely clear, it appears to support an argument (together with the correspondence discussed below) that WCL took control from that date.
[73] Mr Gross’ evidence is that from then as far as he was concerned Mr Wallace acted as manager and as a director of Podular and was making all important decisions, and that Mr Prasad convened meetings with Podular’s staff and made it clear that he was now in control of the company. Mr Gross says that he was shut out of the sale process and the operation of Podular entirely and could not even enter Podular’s factories without Mr Wallace’s permission. Copies of emails appearing to support this are attached to his affidavit. Mr Gross’ evidence is that the success or failure of the sale to Petra was therefore entirely up to WCL and that he agreed to transfer management and control of Podular to WCL because he trusted WCL to do all that was necessary to get the sale to Petra over the line.
[74] In reply evidence, Mr Wallace agrees that he wanted the sale to Petra to happen “in the hope that it would enable WCL to get its money out of [Podular]” but Mr Wallace says that it is not correct that he ever took control over Podular or the negotiations or made operational decisions for Podular during this time. He accepts that he did propose that WCL should have more influence, referring to the 1 November 2022 email and a later email on 4 November 2022, but says despite this being proposed, it did not happen in practice.
[75] Mr Wallace further deposes that contrary to the suggestion in Mr Gross’ affidavit, WCL was never responsible for the payment of Podular staff wages nor was it required to account for their PAYE. Mr Wallace states that WCL was a lender to Podular and some of the lending was intended to help the company cover such costs.
[76] Mr Wallace’s evidence is that Mr Gross and Mr Prasad controlled Podular and the negotiations with Petra and that WCL was not allowed to manage Podular.
[77] Mr Wallace says that Mr Prasad was not working for WCL or representing it. Mr Wallace refers to the fact that Mr Prasad was advised by Mr Hatrick-Smith to address his invoices to Podular, as it was Podular for whom he was acting. Mr Wallace
attaches an email from himself to Mr Hatrick-Smith on 18 November 2022 in support of this and a copy of Mr Prasad’s invoice and covering email, with the invoice showing that it is addressed to Podular.
[78] Further evidence was filed in reply to this evidence by Mr Prasad and Mr Singh for which I granted leave at the beginning of this judgment. Mr Prasad goes into significant detail in relation to the negotiations between Podular and Petra and the discussions between himself, Mr Wallace, Mr Hatrick-Smith, Mr Lowe (WCL’s lawyer) and Mr Gross.
[79] Mr Prasad’s evidence is that around 25 October 2022, Mr Wallace told him that he had decided against any further investment in Podular and that on the same day Mr Prasad sent an email to Mr Gross informing him of this and encouraging him to focus on selling the company to Petra. Mr Prasad said that he thought a sale to Petra was probably the only good option at that time and he told Mr Gross that.
[80] Mr Prasad says that around that time Mr Gross explained to him why Petra was interested in purchasing the struggling Podular, explaining that Petra saw Podular as a strategic acquisition and that Petra was confident that it had more than enough cash to inject into Podular to reboot the company if Podular could provide the staff and infrastructure that Petra needed to start operating with haste. Mr Prasad’s evidence is that Mr Gross explained that Petra was interested in the people and production capabilities at Podular so they could start bidding on contracts right away, saving themselves nine months to a year in setup time.
[81] On the same day, 25 October 2022, Mr Prasad sent Mr Hatrick-Smith a brief update on Podular, advising him that Mr Gross was in talks with Mr Singh from Petra to sell Podular and that failing this they would go into receivership. Mr Prasad also informed Mr Hatrick-Smith that Mr Wallace had decided against any further investment.
[82] Mr Prasad’s evidence is that on the following day, 26 October 2022, Mr Hatrick-Smith emailed Mr Wallace and suggested that Mr Wallace should take control
of Podular to see if the company could “trade forward”. A copy of this email is not attached to Mr Prasad’s evidence.
[83] On 31 October 2022, Mr Wallace invited Mr Prasad to a conference call the following day with Mr Hatrick-Smith to discuss Podular. Mr Prasad says that in the meeting on 1 November 2022 he was updated on the proposed plan for Podular for which the main elements were:
…that WCL would send a representative to negotiate the sale of Podular to Petra, that WCL would take over the Lumen security, and that WCL would make all management decisions until the transaction with Petra was completed.
[84]Mr Prasad deposes that:
In essence, although Podular was a zombie, [Mr Wallace] would keep the company alive with cash injections long enough for the Petra negotiations to proceed so long as he could control the company and negotiation process. For him to have this kind of control, he needed [Mr Gross] on a leash so that [Mr Gross] did not make any moves that would jeopardise [Mr Wallace’s] objectives and plans. The mechanism that was discussed to achieve that power would be that: WCL would have a kind of veto power, and that [Mr Gross] would need [Mr Wallace’s] approval before making any decisions. [Mr Wallace] preferred this as it would mean that the day-to-day affairs of Podular could be overseen by [Mr Gross] whilst he could maintain control of the higher strategy and tactics of the company – specifically as it related to the potential sale to Petra.
[85] On 3 November 2022, there was a virtual meeting between Mr Hatrick-Smith, Mr Wallace, Mr Lowe, and Mr Prasad. Mr Prasad’s evidence is that this meeting was to discuss the upcoming week and to find out how Mr Wallace had decided to approach the Podular-Petra sale. On the same day, Mr Gross forwarded a copy of the heads of terms signed by Petra to Mr Prasad.
[86] On 4 November 2022, Mr Prasad says that he had a heated in-person exchange with Mr Wallace regarding his remuneration where he made it clear that he was unwilling to continue without being paid. That day Mr Wallace emailed Mr Lowe, WCL’s lawyer, asking Mr Lowe if he knew who was running Podular at that time and if they could be involved in remunerating Mr Prasad as a negotiator. On the same day Mr Wallace emailed Mr Gross confirming that $65,800 had been transferred for Podular’s pay roll and suggesting that Mr Wallace join Mr Gross on the following
Monday to meet the “Petra people” in order to negotiate the purchase. Mr Wallace stated that he believed it was necessary for Mr Prasad to be at that meeting as well and to be paid an hourly rate by Podular for the negotiations.
[87]Mr Wallace continued:
…
If Petra agrees to buy Podular and there is a binding agreement which covers all matters between WCL, Petra and Podular I am willing to consider a further advance of up to $500k with an assurance that Petra will meet other Podular running expenses until the total take over has been completed.
Upon the injection of $1.5m into Podular from Petra the company will be under management of a Wallace representative (probably [Mr Prasad]) paid for by Podular with all transactions overseen by VCFO and processed through the VCFO Trust accounts.
Podular will repay the WCL loans in full along with interest and costs upon receipt of the $1.5m from Petra unless WCL agrees to vary that condition as part of the transaction with Petra.
Kind regards,
James
[88] Mr Wallace followed up with Mr Gross on 5 November 2022 saying that he would appreciate a response, “especially with regard to Podular paying anyone to assist with the negotiations with Petra and an agreement that this should be [Mr Prasad]”. There was then a further follow up from Mr Wallace to Mr Prasad on 6 November 2022. Mr Prasad replied on 7 November 2022 explaining that he had been away from his computer and saying that he intended to be involved in order to “help everybody to get through this” and thanking Mr Wallace for his reassurance that he would be remunerated.
[89] Mr Prasad attaches an email from Mr Gross to Mr Wallace, Mr Prasad and Mr Hatrick-Smith on 9 November 2022 explaining the urgency of the situation in relation to the sale to Petra and the steps he had taken in respect of it. Mr Wallace replied on the same day, thanking Mr Gross for his emails of that day and the previous day which he said he was still working through. Mr Wallace indicated some suspicions about Petra’s intentions, referring to a delay in the scheduled meeting. The email finished by asking Mr Gross to send the details of the arrangements with Mr Prasad to Mr
Hatrick-Smith immediately so that Mr Prasad could be remunerated on an ongoing basis. There are then several emails attached in relation to the arrangements for payment of Mr Prasad’s remuneration.
[90] Mr Wallace then sent an email to Mr Hatrick-Smith on 9 November 2022 saying he had made it abundantly clear to everyone that Podular is to remunerate Mr Prasad but that he in turn will be advancing further funds to Podular to carry them through to a sale. In a further email the same day Mr Wallace asks Mr Hatrick-Smith to immediately authorise a payment to Mr Prasad, with the email recording that the payment was to be “from Wallace Corporation — via VCFO Trust accounts — to [Mr Prasad] as an advance for work with Podular on behalf of WCL”.
[91] On 10 November 2022, Mr Prasad and Mr Wallace exchanged emails in relation to the likely sale price to Petra with Mr Prasad confirming that the numbers discussed earlier had been around $4.4 million although noting that there was a potential that this had been significantly impacted by recent weeks.
[92] Around this time, Mr Gross forwarded an email from Mr Singh of Petra to Mr Prasad. Mr Gross expressed concern that Mr Singh has emailed Mr Gross but that Mr Gross could not talk to Mr Singh because Mr Wallace needed to authorise it. Mr Gross follows up on this email on Friday, 11 November 2022, as follows:
Hi Jonny [Prasad] and Roger [Hatrick-Smith],
I’m writing to express my concerns, I’ve assigned all the control to James Wallace. [O]n Wednesday night Johnny [Prasad] told me I can’t do anything without seeking permission first. I was planning to go to Hamilton factory, and been told I cannot do it. It is fair enough because James is in control. Three people resigned yesterday, and by the time something happened we will have no company left to sell.
Two days I am waiting, at home doing nothing, to have a meeting or do something.
I’ve sent an email regarding the hive down, I’ve been calling and smsing about the urgency move and do something. I don’t hear anything and I’m not aware of any plan.
Can you let me know what is the plan and what is happening because soon we will have nothing to sell.
I am not allowed to talk to [Mr Singh], can you get back to him? [P]lease. I believe it is looking really bad [Mr Singh] don’t get any communication from us.
NZ harold [sic] called me, I called Jonny (not available). I called 10 times in the last two days.
[I]s it too much to ask what the plan is? Regards,
Ilan Gross
[93] Mr Prasad then responded to Mr Gross with a draft reply for Mr Singh saying: “Send this to [Mr Singh] after we finish our Zoom”.
[94] Later that day Mr Gross sent an email to Mr Prasad asking if Mr Wallace can remove his personal guarantee as Mr Wallace will be the 100 per cent owner of the new company following the “hive down”. Mr Prasad forwarded this to Mr Wallace whose response was:
[Mr Gross]’s personal guarantee may be all that I am left with and in itself was what you all assured me was sufficient and valuable.
Accordingly there is no way I am going to withdraw the requirement of his personal guarantee.
[95]Mr Prasad forwarded this email to Mr Gross.
[96] Mr Wallace authorised payment of Podular’s payroll again on 11 November 2022.
[97] Mr Singh from Petra met with Mr Prasad and Mr Gross, together with others, on 14 November 2022. Mr Prasad’s evidence is that he was in regular contact with the WCL team throughout the negotiations, which spanned across multiple days, giving as an example that during dinner on the first night, he informed WCL that it would be beneficial to have one of Podular’s senior builders at the meeting the next day and that after this call WCL immediately liaised with a builder and purchased return flights for him from Christchurch to Hamilton as well as accommodation. A WCL credit card was provided to help with costs that came up during negotiations, including the hiring of cars and so forth.
[98] Mr Prasad says that by the end of 16 November 2022, Mr Singh and his Australian business partner had reached a decision to do a deal with the “hived-down Podular” and WCL. They wanted to move forward on this deal quickly and asked if things could be agreed to the following morning. Mr Prasad says that he urgently met in person with Mr Wallace to update him and a meeting between Mr Prasad, Mr Wallace, Mr Lowe, Mr Hatrick-Smith, Mr Singh and his business partner was arranged for the next day. Later that evening Mr Lowe sent Mr Prasad an email covering the structure of what he refers to as the “Petra-WCL deal” would be.
[99] A meeting was held on 17 November 2022 at the Auckland Wynn Williams’ offices where Mr Prasad’s evidence is that the key points of the deal were reached and agreed to in principle. Mr Prasad’s deposes that “all that was to happen from there was that [Mr Lowe] would draft up the relevant documents (sale and purchase agreement etc) and the deal would be finalised”.
[100] However, the draft documents were not provided the next day as Mr Prasad expected but instead on 18 November 2022. The draft documents were sent by Mr Lowe to Mr Wallace, Mr Hatrick-Smith and Mr Prasad. Mr Prasad says that he was mindful of how much work he was being asked to do and was becoming increasingly anxious about his remuneration. He therefore sent an email to Mr Wallace and Mr Hatrick-Smith with his recent timesheet and invoice emphasising that, as negotiated, he would need to be paid immediately to continue working. Nobody from WCL replied, despite following up with another email the next day. Mr Prasad deposes that Mr Lowe informed him via a phone call on 20 November 2022 that Mr Wallace wished to renegotiate his remuneration, but Mr Prasad told Mr Lowe that he was unwilling to do so.
[101] Mr Prasad’s evidence is that Mr Wallace ignored Mr Prasad’s requests for payments and instead made requests for information on 21 November 2022 asking how much was needed for the payroll, whether Petra was going to pay half and what exactly the deal was that was reached. Mr Prasad responded saying that he was only going to move forward if his remuneration was agreed and forthcoming.
[102] Mr Wallace replied that same day saying that despite the deadline for payment of the payroll passing and despite the subsequent requests for the amount “we have still not been advised of that figure”. Mr Prasad did provide the payroll amount required that day but sent a further email on 22 November 2022 to Mr Wallace headed “Podular Purgatory” saying it seemed clear that Mr Wallace was proceeding without Mr Prasad’s involvement and making a final suggestion that Mr Wallace act with speed.
[103] Mr Prasad says in his evidence that he had a Zoom meeting scheduled with Petra in which he knew that Mr Singh would ask him how things were going and would want an update. Mr Prasad says that at the Zoom meeting he had to say that he had “zero idea” what was happening, that no one was communicating with him and that they were trying to cut him out of the deal and not pay him. Mr Prasad says this did not impress Mr Singh. Mr Prasad says that Mr Singh had told him over dinner while he was in New Zealand that he had once been part of a deal where he was cut out at the last minute and so he was extremely attentive to the characters and ethics of the people he did business with and that he believed integrity is the most important ingredient to successful business.
[104] Mr Prasad says that he believes that “WCL bungled the deal that was on the table” and, more specifically, that it was WCL’s unprofessional and unethical behaviour that put Petra off.
[105] Mr Singh has also provided an affidavit and confirms that at the meeting on 17 November 2022 at the offices of Wynn Williams in Auckland he expressed an intention to purchase the assets of Podular and a deal was agreed to in principle. Mr Singh says that the next steps were for WCL’s representatives (described by Mr Singh as Mr Hatrick-Smith and Mr Lowe) to draft up the relevant documents for the transaction and urgently send them to Petra.
[106]Mr Singh’s evidence is:
I did not receive those documents in a timely manner, and also discovered that [WCL] was unwilling to communicate or pay Mr Prasad for his work. This put me off and as a result I decided to not proceed with the deal.
[107] From the above, although the position is far from clear, I consider there is sufficient evidence for it to be reasonably arguable that WCL did take control of Podular. Mr Prasad’s evidence needs to be considered carefully because it appears WCL failed to pay him but Mr Prasad has attached significant email correspondence to his affidavit which appears to support his version of events.
Is it reasonably arguable WCL actions or inactions prevented the sale from happening?
[108] The evidence of Mr Gross, Mr Prasad and particularly Mr Singh from Petra, an independent witness, provides a sufficient basis for finding that it is reasonably arguable WCL’s actions prevented the sale. Mr Singh says the deal was agreed in principle and it was only because he did not receive the documents in a timely manner and also heard about the treatment of Mr Prasad that the deal did not go through. Both of these matters arguably arose as a result of WCL’s actions or inactions.
[109] In accordance with the comments of the Supreme Court in Melco regarding the necessary nexus, the default by the party in WCL’s position must have materially affected the ability of Podular to comply with the contract and that where both parties have contributed to some extent, “material” will mean “substantial and operating”. It is reasonably arguable that the actions of WCL were a substantial and operating cause of the insolvency in this case in circumstances where it arguably took control and prevented Podular (or Mr Gross) from acting, failed to finalise the deal and caused the remuneration issues with Mr Prasad that Mr Singh says affected the sale.
If the sale had happened, would there have been money owing by Podular and therefore Mr Gross under the Guarantee?
[110] The evidence is relatively slim in relation to this question. Mr Prasad’s evidence is that he cannot remember exactly what numbers were discussed as they were not the main focus of the negotiations but that he knows it was a number that WCL, Podular’s customers and Mr Gross, as Podular’s largest shareholder, would have all been happy with. Mr Prasad’s evidence is that he walked out of the Wynn Williams’ offices with a smile on his face as it seemed that a deal had been done.
[111] Neither Mr Wallace nor Mr Hatrick-Smith sought leave to file further evidence contradicting Mr Prasad’s evidence. I therefore find it is reasonably arguable that if the sale had happened, Podular’s loans to WCL would have been repaid and there would be no money owing under the Guarantee.
Conclusion on defence based on the “prevention principle”
[112] I therefore find that Mr Gross has a reasonably arguable defence based on the prevention principle. As discussed above, such a defence is not prevented by the no set-off clause because if established, it would extinguish liability in the first place. To properly determine whether this defence can be established will require discovery and examination of witnesses in a full hearing.
[113] The defendant will need to replead its defence to include an allegation that WCL is in default of the Loan Agreement but the failure to plead this already does not prevent the defence being relied on for the purposes of this summary judgment application. Defendants are not required to file statements of defence prior to the hearing of a summary judgment application. In this case the defendant has done so but it would not be appropriate to enter summary judgment where the statement of defence could be amended to plead a reasonably arguable defence.
Further available defences
[114] In addition, Mr Gross submits the Guarantee is unconscionable, and therefore unenforceable, on the basis of his dyslexia, the fact that he speaks English as a second language, did not receive independent legal advice, misrepresentations as to the nature and effect of the Guarantee and because there were issues with the execution of the Guarantee including because his signature was not witnessed.
[115] Counsel for Mr Gross submits that it is a lengthy, formal written document running to 14 pages with multiple conditions and that the plaintiff cannot have had any grounds to believe that its content had been explained to Mr Gross or that Mr Gross had understood its contents when it was signed.
[116] Mr Gross’ evidence is that he thought that the Guarantee was for one purpose and only subsequently found out it was for another. He says it was never intended to be an unlimited personal guarantee. His counsel submits that the Guarantee is therefore unenforceable because the position, namely the purpose of the Guarantee, was misrepresented to Mr Gross.
[117] WCL submits in response that there is no expert evidence in relation to Mr Gross’ dyslexia and that steps taken by Mr Gross, including in relation to Lumen’s guarantee, indicated a clear ability to understand the transaction and its implications. Furthermore, any issues with execution do not invalidate the Guarantee and the circumstances here do not nearly meet the threshold for unconscionability.
[118] Had these further defences been the only basis for Mr Gross’ opposition to the application for summary judgment, he may have faced difficulties, particularly in relation to the original $500,000 loan under the Loan Agreement. However, as I have found that he has a reasonably arguable defence based on the prevention principle, it is appropriate these defences are determined in the substantive hearing rather than in the context of a summary judgment application.
[119] Finally I record that further issues appear to arise for the plaintiff because although the first $500,000 loan was advanced under the Loan Agreement, it is not clear on what terms the additional amounts were advanced. Mr Gross’ Guarantee does not appear to be limited to amounts under the Loan Agreement, but questions may arise in relation to the circumstances in which the additional amounts were advanced.
Result
[120]The plaintiff’s application for summary judgment is dismissed.
Costs
[121] I did not hear from the parties on costs. The usual position in unsuccessful summary judgment applications is that costs are reserved in accordance with the principle in NZI Bank v Philpott.21 I ask the parties to confer and only if that position
21 NZI Bank v Philpott [1990] 2 NZLR 403 (CA).
is not accepted to file memoranda, on behalf of the plaintiff within 25 working days and the defendant within a further 10 working days.
Associate Judge Sussock
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