Willock v Hunt
[2020] NZHC 1325
•12 June 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2019-404-002483
[2020] NZHC 1325
BETWEEN CATHERINE MARJORIE WILLOCK
Plaintiff
AND
TONY JAMES HUNT
First Defendant
AND
PAUL RONALD STODDART
Second Defendant
Hearing: 21 May 2020 Appearances:
K B Arthur for the Plaintiff
No appearances for the First and Second Defendants
Judgment:
12 June 2020
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 12 June 2020 at 2.00pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel:
Rishworth Wall & Mathieson, Gisborne
J Cooper QC, Shortland Chamber, Auckland McVeagh Fleming, Auckland
Kevin Gould, Barrister, Auckland Davies Law, Auckland
WILLOCK v HUNT [2020] NZHC 1325 [12 June 2020]
Introduction
[1] The plaintiff, Catherine Willock, applies for summary judgment against the second defendant, Paul Stoddart, for repayment of a loan that Ms Willock made to him in February 2006 when he and the first defendant, Tony Hunt, were involved in the purchase of a farm in which Ms Willock held a substantial interest. Ms Willock made a similar loan to Mr Hunt.
[2] While Ms Willock applied initially for summary judgment against Mr Hunt as well as Mr Stoddart, Ms Willock and Mr Hunt have resolved their dispute, apart from an issue that both parties agree is not suitable for summary judgment. For that reason, the application for summary judgment now applies only to Mr Stoddart. However, I have had regard to the affidavit affirmed by Mr Hunt on 31 January 2020 in which Mr Hunt adduced evidence that materially altered the basis of Ms Willock’s application against Mr Stoddart and which provided helpful background to the loans made by Ms Willock to Mr Stoddart and to Mr Hunt.
[3] Mr Stoddart filed a notice of opposition to Ms Willock’s application but did not file any evidence or take part in the hearing of the application. For that reason, the application proceeded by way of formal proof.
Relevant background
[4] In late 2005 and early 2006, Mr Stoddart and Mr Hunt were involved in negotiations to purchase Burnage Station, a farm near Gisborne, in which Ms Willock had a 37.5 per cent interest. Mr Stoddart and Mr Hunt proposed purchasing a half share in the farm through Rossmay Holdings (2006) Ltd (Rossmay), in which they each held a 45 per cent interest.1 In his affidavit, Mr Hunt said the negotiations also involved the possible purchase of a nearby property, Te Pa Station. When some of the arrangements envisaged for the purchase of Te Pa Station did not eventuate, Mr Hunt and Mr Stoddart faced a funding shortfall of approximately $680,000 for the purchase of Burnage Station.
1 Mr Hunt’s brother, Dean Hunt, held the other 10 per cent interest in Rossmay.
[5] Apparently at the suggestion of Ms Willock’s then solicitor, Ms Willock agreed to lend money to Mr Stoddart and Mr Hunt to cover the shortfall. Mr Hunt said that at his insistence separate agreements were made for the two loans.
Term loan agreement with Mr Stoddart
[6] On 27 February 2006, Mr Stoddart signed a term loan agreement with Ms Willock (Term Loan Agreement). A copy of the Term Loan Agreement and an accompanying general security agreement were exhibited to Ms Willock’s affidavit sworn on 6 November 2019.
[7] For the purposes of the present application, the Term Loan Agreement provided as follows:
(a)The principal sum loaned was $341,875.00.
(b)Interest commenced on 28 February 2006 and was to be compounded annually.
(c)The term of the loan was three years – to 27 February 2009, on which date the principal sum was to be repaid, together with interest.
(d)There was a higher interest rate of 10 per cent per annum and a lower interest rate of 8 per cent.
(e)The borrower undertook to pay interest at the higher interest rate, but the lender agreed to accept interest at the lower interest rate if interest was paid at the due date for payment or within seven days of that date.
(f)The security for the loan was all of Mr Stoddart’s shares in Rossmay.
[8] Clause 7(a) of the Term Loan Agreement provided that if default occurred, the lender could at any time call up the balance of money owing. Clause 7(b) provided:
Delay does not affect exercise of powers: The lender’s rights under this contract will not be affected by any delay in exercising them (whether or not
the lender knows they have become exercisable). The lender may only be held to have acquiesced in or waived any matter in relation to this clause if and to the extent that the acquiescence or waiver is expressed in writing.
[9] Mr Stoddart did not repay the loan and interest accrued on the due date of 27 February 2009 or at any subsequent date before May 2011.
Deed of May / June 2011
[10] In mid-2011, Ms Willock and Mr Stoddart signed a deed concerning the loan to Mr Stoddart (the Deed). Ms Willock made no reference to the Deed in her original statement of claim dated 7 November 2019 or in her affidavit sworn on 6 November 2019. The Deed came to light in Mr Hunt’s affidavit.
[11] In her supplementary affidavit sworn on 11 February 2020, Ms Willock said she did not refer to the Deed in her earlier affidavit because she did not have a copy of it at the time.2 Ms Willock said she did not recall entering into the Deed with Mr Stoddart but accepted that her signature is on page 3 of the Deed. That page recorded that Ms Willock signed the Deed on 29 May 2011 in the presence of Alfred Turner and that Mr Stoddart signed on 22 June 2011 in the presence of Colin Sharp.
[12] On 11 February 2020, Ms Willock filed an amended statement of claim and an amended application for summary judgment that took account of the Deed.
[13] The Deed recorded that the amount owing by Mr Stoddart to Ms Willock as at 28 August 2010 was $483,840.00, which was defined as “the Current Debt”. It then set out various provisions which are discussed more fully below. These provisions envisaged the suspension of interest provided Mr Stoddart made a payment to Ms Willock in accordance with cl 3 of the Deed and made annual payments in accordance with cl 4 of the Deed. Clause 5 set out how those payments were to be calculated.
2 Ms Willock says in her supplementary affidavit sworn on 11 February 2020 that Mr Hunt’s solicitor’s provided Ms Willock’s solicitors with a copy of the deed.
Payments by Mr Stoddart
[14] Carol Nelson of Coates Associates Ltd (Coates Associates), Ms Willock’s accountants, explained in a supplementary affidavit sworn on 11 February 2020 that Mr Stoddart paid $35,150 to Coates Associates between February 2012 and June 2017 as follows:
(a)On 7 February 2012, three payments of $9,000.00, $10,000.00 and
$10,000, which were each recorded in the Coates Associates ledger as “Stoddart Loan Payment FROM BUSINESS LIGHTING SO”;
(b)On 13 April 2015, one payment of $3,650.00, which was recorded in the Coates Associates ledger as “Stoddart Income Share 2012-2014 5% FROM STODDART, PAUL”;
(c)On 30 June 2017, one payment of $2,500.00 which was recorded in the Coates Associates ledger as “22 Bed Deposit paid Paul Stoddart”.
Letter of demand
[15] On 19 March 2018, Evolution Lawyers, solicitors then acting for Ms Willock, sent Mr Stoddart a letter of demand (Letter of Demand). The Letter of Demand referred to and attached a copy of the Term Loan Agreement.
[16]Paragraph 4 of the Letter of Demand stated:
On behalf of Ms Willock, we demand payment of the sum of $318,000 plus interest and costs by 5 pm, 2 May 2018. The sum of $318,000 is the principal amount payable as at the date of default on 22 January 2014.
[17]The Letter of Demand made no reference to the Deed.
[18] Mr Stoddart did not repay any money to Ms Willock following receipt of the Letter of Demand.
Ms Willock’s claim
[19] In her amended statement of claim dated 11 February 2020, Ms Willock seeks judgment in the sum of $968,610.11 plus interest from the date of filing the claim to the date of judgment, either at the contractual rate of 10 per cent per annum, compounded annually, or in accordance with s 24 of the Interest on Money Claims Act 2016, plus costs. In her submissions at the hearing on 21 May 2020, Ms Arthur, counsel for Ms Willock, updated the amount sought to $1,078,185.79 plus costs and interest.
[20] As explained by Ms Nelson in a supplementary affidavit affirmed on 18 May 2020, the latter figure was arrived at on the basis that the date of default by Mr Stoddart was 1 April 2012, with interest calculated from that date at 10 per cent per annum, compounded annually, to 21 May 2020 but with adjustments to take account of the payments made by Mr Stoddart in 2012, 2015 and 2017.
[21] In her supplementary affidavit of 18 May 2020, Ms Nelson provided a calculation for an alternative scenario which, as Ms Arthur explained in her submissions, was based on the Court finding that Ms Willock was not entitled to charge interest until demand was made on 19 March 2018 in the Letter of Demand. Under this scenario, Mr Stoddart would owe Ms Willock $651,008.71, based on the Current Debt of $483,840.00 as set out in the Deed, minus $35,150 for the payments made by Mr Stoddart, with interest of $202,318.71 calculated at 10 per cent per annum from 19 March 2018 to 21 May 2020.
Mr Stoddart’s notice of opposition
[22] In a notice of opposition dated 30 January 2020, Mr Stoddart’s then counsel said Mr Stoddart intended to oppose Ms Willock’s application for summary judgment on the grounds that:
(a)The Term Loan Agreement was a credit contract as defined in the Credit Contracts and Consumer Finance Act 2003 (CCCF Act) and Ms Willock was in breach of the Act because:
(i)The compounding of interest is contrary to s 40 of the Act; and
(ii)Ms Willock had failed to carry out her responsibilities under s 9C of the Act; and
(b)The Letter of Demand was a representation by which Ms Willock was estopped as to the quantum of her claim.
[23] As noted at [3], Mr Stoddart did not file evidence and was not represented and did not appear at the hearing on 21 May 2020.
Issues for decision
[24] In accordance with r 12.2 of the High Court Rules 2016, the Court may give judgment in favour of Ms Willock if Ms Willock satisfies it that Mr Stoddart has no defence to her claim.
[25] The questions arising from in Ms Willock’s claim and Mr Stoddart’s notice of opposition and which require determination are:
(a)What were Mr Stoddart’s repayment obligations under the Term Loan Agreement?
(b)Was the Term Loan Agreement a credit contract under the CCCF Act and, if so, did Ms Willock fail to comply with that Act?
(c)Did the Deed vary Mr Stoddart’s obligations under the Term Loan Agreement?
(d)Did Mr Stoddart default on his obligations under the Deed?
(e)If Mr Stoddart defaulted under the Deed, when did interest start to accrue?
(f)What was the effect of the Letter of Demand?
Analysis
What were Mr Stoddart’s repayment obligations under the Term Loan Agreement?
[26] Mr Stoddart does not dispute the validity of the Term Loan Agreement or his obligations to make repayment under it as set out in Ms Willock’s amended statement of claim.
[27]Under the Term Loan Agreement:
(a)Mr Stoddart had an obligation to repay Ms Willock the principal sum loaned of $341,875.00 plus interest calculated from 28 February 2006 and compounded annually;
(b)If repayment of the total sum due, including interest, was paid on 27 February 2009 or within 7 days of that date, interest would be calculated at 8 per cent per annum; and
(c)If repayment of the total sum due, including interest, was not paid on 27 February 2009 or within 7 days of that date, interest would be calculated at 10 per cent per annum.
[28] It is not in dispute that Mr Stoddart did not make repayment within 7 days of 27 February 2009. Therefore, unless Ms Willock agreed to vary the terms of the Term Loan Agreement, Mr Stoddart had an obligation to repay Ms Willock $341,875.00 plus interest calculated at 10 per cent per annum, compounded annually, from 28 February 2006 until the date of repayment.
Was the Term Loan Agreement a credit contract under the CCCF Act?
[29] It is clear that the Term Loan Agreement was a credit contract for the purposes of the CCCF Act, having regard to ss 6 and 7 of the Act.3 However, in his notice of
3 Section 6 provides:
In this Act, unless the context otherwise requires, credit is provided under a contract if a right is granted by a person to another person to—
(a)defer payment of a debt; or
(b)incur a debt and defer its payment; or
opposition, Mr Stoddart says Ms Willock had failed to comply with ss 9C and 40 of the CCCF Act. The obligations in s 9C apply only to a “lender” as defined in s 9B, which provides, in the present context, that a lender is a creditor under a “consumer credit contract”. Similarly, the restrictions on default interest charges under s 40 of the CCCF Act apply only to “consumer credit contracts”.
[30] The real issue, therefore, is whether the Term Loan Agreement is a consumer credit contract as defined in the CCCF Act.
[31]Section 13 of the CCCF Act provides:
In any proceedings in which a party claims that a credit contract is a consumer credit contract, it is presumed that the credit contract is a consumer credit contract unless the contrary is established.
[32] It may be inferred from Mr Stoddart’s Notice of Opposition, in which he refers to ss 9C and 40 of the CCCF Act that Mr Stoddart has claimed that the Term Loan Agreement was a consumer credit contract.
[33] However, under r 12.9(1) of the High Court Rules 2016, Mr Stoddart was required, at least three working days before the hearing, to file both a notice of opposition and an affidavit “in answer to” Ms Willock. Under r 12.9(2), “in answer to” means, for the purposes of r 12.9(1), setting out the defence to Ms Willock’s causes of action. Mr Stoddart filed no affidavit “in answer to” Ms Willock. Accordingly, under r 12.9(3), he may not be heard in opposition to Ms Willock’s application except by leave of the Court. No such leave was sought.
[34] I do not consider that Mr Stoddart’s inferential claim in his notice of opposition that the Term Loan Agreement was a consumer credit contract amounts to a claim sufficient to trigger the presumption in s 13 of the CCCF Act when that notice of
(c) purchase property or services and defer payment for that purchase (in whole or in part).
Section 7(1) provides:
In this Act, unless the context otherwise requires, credit contract means a contract under which credit is or may be provided.
opposition was not supported by an affidavit as required by the High Court Rules and Mr Stoddart took no part in the hearing.
[35] In any event, there is nothing before the Court to suggest that the credit was to be used by Mr Stoddart wholly or predominantly for personal or domestic or household purposes which, in terms of s 11(1)(b) of the CCCF Act, would be required to bring the Term Loan Agreement within the meaning of “consumer credit contract” as set out in s 11(1). To the contrary, Mr Hunt’s affidavit states that he and Mr Stoddart had a history of taking up investment opportunities and purchasing properties, using companies which included Rossmay in their name, and that Rossmay Holdings (2006) Ltd was the latest example of this practice and was incorporated in November 2005 to purchase Burnage Station.
[36] Mr Hunt’s affidavit, therefore, establishes that the loan that Ms Willock made to Mr Stoddart was made to facilitate an investment opportunity and that the Term Loan Agreement was not a consumer credit contract for the purposes of the CCCF Act.
[37]Accordingly, no issue arises in terms of ss 9C and 40 of the CCCF Act.
Did the Deed vary Mr Stoddart’s obligations under the Term Loan Agreement?
[38] As confirmed by her amended statement of claim and supplementary affidavit sworn on 11 February 2020, Ms Willock accepts that the Deed modified the Term Loan Agreement. I accept that is so.
[39] Importantly, the Deed refers specifically to the Term Loan Agreement. In particular, the preamble or “Background” to the Deed recorded:
(a)The repayment obligations of Mr Stoddart under the Term Loan Agreement;
(b)That Mr Stoddart had defaulted in making the payment due on 27 February 2009;
(c)That Ms Willock had served notice on Mr Stoddart advising that he was in default and making demand for payment of the principal sum plus interest due under the Term Loan Agreement; and
(d)The parties had reached a compromise which they wished to record in the Deed.
[40] In terms of cl 7(b) of the Term Loan Agreement, therefore, it is clear that the Deed constituted written acquiescence by Ms Willock to vary her rights under the Term Loan Agreement.
Did Mr Stoddart default on his obligations under the Deed?
[41] To answer this question and the following question concerning the start date for interest, it is necessary to set out the central provisions of the Deed.
[42] Clause 1 recorded that the amount owing by Mr Stoddart (the Borrower) to Ms Willock (the Lender) as at 28 August 2010 was agreed to be $483,840.00, which sum was defined as “the Current Debt”. It is not clear how that figure was arrived at, but no issue was raised as to the correctness of the figure.
[43]Clauses 2 to 7 provided:
2.The Borrower acknowledges that the Current Debt is repayable to the Lender. The Lender will provide the Borrower the ability to make payment per clause 5 and will not demand repayment of the Current Debt so long as this clause is satisfied. The parties agree that pending demand the Current Debt shall be free of interest.
3.The Borrower shall make a payment to the Lender an amount equal to the Borrowers [sic] 2008/2009 tax refund which is estimated to be
$70,000. This payment shall be made within 7 days of the tax refund being received from the IRD. The Borrower shall pay all future tax refunds received from the IRD.
4.The Borrower will make payments in reduction of the Current Debt in March of each subsequent year (commencing in March 2012) until the Current Debt is repaid in full.
5.The amount to be paid by the Borrower to the Lender in reduction of the Current Debt each year (commencing March 2012) shall be
determined by agreement between the Lender and the Borrower in each year for the purposes of which the Borrower will (on a continuing basis) disclose to the Lender in confidence all circumstances relating to the Borrower’s ability to repay all or part of the Current Debt including the Borrower’s income for the previous calendar year. The amount payable shall not be less than 5% of all income to a maximum of 50% of said income.4
6.If the Borrower:
(a)Does not make the payment referred to in clause 3 above; or
(b)Fails to make an annual reduction in the Current Debt in accordance with clause 4;
The Lender shall be entitled to charge interest at a rate of 8% per annum (lower interest rate) or 10% per annum (higher interest rate) in accordance with the Term Loan Agreement and pursue the current Debt with interest.
7.Subject to the variation comprised in clauses 3 to 4 above the provisions of the Term Loan Agreement are hereby confirmed.
[44] In her supplementary affidavit sworn on 11 February 2020, Ms Willock says, in effect, that she does not know whether the $29,000 paid by Mr Stoddart was in satisfaction of Mr Stoddart’s obligations under cl 3 of the Deed.5 However, she does not assert that Mr Stoddart breached his obligations under cl 3. Her claim and Ms Nelson’s calculations are based on Mr Stoddart not making the first of the payments required under cl 4.
[45] I accept that on 1 April 2012 Mr Stoddart was in default under the Deed because he did not make a payment in March 2012 as required by cl 4. That is so, even though, as recorded in the Coates Associates ledger, he made a payment on 13 April 2015 which appears to have been intended to cover payments due in March 2012, March 2013 and March 2014.
4 The underlined words were written in handwriting and initialled by at least one party and replaced the words “or to the satisfaction of the Lender” which were struck through.
5 In paragraph 10 of her affidavit, Ms Willock states, “I do not know if this payment is equal to Mr Stoddart’s 2008/2009 tax refund or if payment was made within seven days of Mr Stoddart receiving the tax refund from the IRD.”
If Mr Stoddart defaulted under the Deed, when did interest start to accrue?
[46] This question arises because cl 2 stated that “the parties agree that pending demand the Current Debt will be free of interest” while cl 6 provided that if Mr Stoddart defaulted under cl 4, Ms Willock was entitled to charge interest in accordance with the Term Loan Agreement.
[47] Ms Arthur says that there is an inconsistency between the two clauses and submits that cl 6 should prevail because it dealt specifically with the amount of interest payable on the debt and when the entitlement to charge interest arose.
[48] The intention of the parties must be ascertained by reference to the Deed, and if it is required, evidence of the context in which the Deed was made. Other than the Deed itself, there is little evidence of the facts and circumstances known to the parties when they entered into the Deed or of what the parties were trying to achieve in entering into the Deed.
[49]As Tipping J said in Vector Gas Ltd v Bay of Plenty Energy Ltd:6
[19] The ultimate objective in a contract interpretation dispute is to establish the meaning the parties intended their words to bear. In order to be admissible, extrinsic evidence must be relevant to that question. The language used by the parties, appropriately interpreted, is the only source of their intended meaning. As a matter of policy, our law has always required interpretation issues to be addressed on an objective basis. The necessary inquiry therefore concerns what a reasonable and properly informed third party would consider the parties intended the words of their contract to mean. The court embodies that person. To be properly informed the court
must be aware of the commercial or other context in which the contract was made and
of all the facts and circumstances known to and likely to be operating on the parties’
minds. Evidence is not relevant if it does no more than tend to prove what individual parties subjectively intended or understood their words to mean, or what their negotiating stance was at any particular time.
(emphasis added; footnotes omitted)
[50] But Mr Stoddart has presented no evidence and Ms Willock says she has no memory of the Deed. Ms Willock’s lack of memory is surprising given the size of the debt owed by Mr Stoddart, the specificity of the terms of the Deed, which envisaged an annual exchange of information between Mr Stoddart and Ms Willock, and the way
6 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444.
in which Mr Stoddart’s payments in 2015 and 2017 were recorded in the Coates Associates ledger. As discussed below, those records relate back the terms of the Deed.
[51] As Lord Mustill observed in Charter Reinsurance Co Ltd v Fagan, the words used by the parties “… must be set in the landscape of the instrument as a whole.”7
[52] It is apparent that the major features of the landscape of the Deed was that Mr Stoddart was unable to meet his obligations under the Term Loan Agreement, both as to repayment of the principal sum, as well as interest, and that the parties had agreed on a compromise to enable him to chip away at the debt he owed Ms Willock by making regular payments.
[53] The critical clauses are cls 3, 4 and 5, which provided when Mr Stoddart must make payments and what those payments must be. Clause 3 required Mr Stoddart to pay all of an expected tax refund from the Inland Revenue Department for the 2008/2009 tax year and to pay Ms Willock all future tax refunds, presumably until the debt was repaid. In addition, cl 4 required Mr Stoddart to make annual payments in reduction of his debt until it was paid. Clause 5 provided that the annual payments under cl 4 would be based on disclosure of Mr Stoddart’s annual income and must be no less than 5 per cent of that income and no more than 50 per cent of that income.
[54] Clause 5 required Mr Stoddart to disclose to Ms Willock, albeit in confidence, “all circumstances” relating to his ability to repay his debt. I infer from that intrusive requirement, as well as the stipulation of minimum and maximum parameters for the annual payments, and the requirement in cl 3 that Mr Stoddart pay Ms Willock all future tax refunds, that the parties knew that repayment was going to be very difficult for Mr Stoddart. I also infer that one of the key aspects of the Deed for Mr Stoddart was to ensure that the debt did not continue to grow while he made the payments required under cl 4.
[55] That is the context against which cls 2 and 6 should be interpreted. The second sentence of cl 2 stated that Ms Willock would provide Mr Stoddart “… the ability to make payment under clause 5 and will not demand repayment so long as this clause is
7 Charter Reinsurance Co Ltd v Fagan [1996] 2 WLR 726 at 756, [1997] 1 AC 313 (CA) at 384.
satisfied.” The last sentence then recorded the parties’ agreement that pending demand the Current Debt would be free of interest.
[56] I consider that the first part of the second sentence of cl 2 meant that Ms Willock would give Mr Stoddart time to make the payments required under that clause and that she would not demand repayment of the loan and outstanding interest as long as he paid the amounts required by cl 5. The last sentence of cl 2 added the significant further assurance to Mr Stoddart that no interest would be charged until Ms Willock made demand.
[57] I do not accept that cl 6 is inconsistent with or varies or qualifies cl 2. Clause 6 provided that if Mr Stoddart did not make the payments required under cls 3 or 4, Ms Willock was “entitled” to charge interest at the rates set out in the Term Loan Agreement. The clause does not state that interest started to run at the date of any default. It did not qualify the requirement in cl 2 that Ms Willock must make demand before interest started to accrue. I consider that the intention of the parties was that if Mr Stoddart did not comply with cl 3 or cl 4, Ms Willock could demand repayment and then interest would start to accrue.
[58] I am satisfied, therefore, that notwithstanding Mr Stoddart’s non-compliance with cl 4 of the Deed and notwithstanding that Ms Willock had the ability under cl 6 of the Deed to require Mr Stoddart to pay interest because of this non-compliance, in order for interest to start to accrue, Ms Willock was required to make demand for repayment of the loan. That was the assurance given to Mr Stoddart in cl 2.
[59] I am reinforced in that conclusion by the fact that Ms Willock’s accountants recorded Mr Stoddart’s payment in April 2015 as being in payment for the years 2012- 2014 and made specific reference to the 5 per cent minimum payment required by cl 5. There can be no real doubt, therefore, that Ms Willock’s agents were aware that the payment was being made in fulfilment of Mr Stoddart’s obligations under the Deed.
[60] Similarly, the payment made in June 2017 for the purchase of a bed was clearly a payment of the kind envisaged in the last part of cl 5. That part envisages a specific demand for such a payment. It would be unlikely for Mr Stoddart to have made that
payment without a specific request from Ms Willock or for Ms Willock to have been unaware of the Deed in making such a request.
[61] If Ms Willock had intended to require payment of interest because of Mr Stoddart’s late payment in 2012, she had the opportunity to do so but she did not.
[62] For these reasons, I consider that Mr Stoddart has a clearly arguable defence to Ms Willock’s claim that interest began to accrue on 1 April 2012 following Mr Stoddart’s failure to make a payment in March 2012.
What was the effect of the Letter of Demand?
[63] The first issue that arises under this question is whether the Letter of Demand constituted a demand for the purposes of cl 2 of the Deed so that interest started to accrue in accordance with cl 6 of the Deed.
[64] The Letter of Demand made no reference to the Deed and, in paragraph 4, demanded payment by 2 May 2018 of the sum of $318,000.00. The paragraph stated that sum was the principal amount payable, as at the date of default, which it said was 22 January 2014.
[65]Ms Willock has not provided any evidence to explain how the amount of
$318,000.00 was calculated. That amount is different from the Principal Sum stated in the Term Loan Agreement and from the Current Debt stated in the Deed. Nor does Ms Willock provide any evidence to explain why 22 January 2014 was the date of default. That date is different from the effective dates of default in the Term Loan agreement (27 February 2009) and in the Deed (1 April in any year from 2012).
[66] Despite these inconsistencies, I am satisfied that the Letter of Demand was sufficient to trigger the accrual of interest for the purposes of cl 6 of the Deed. I reach that conclusion because:
(a)Mr Stoddart would have had no doubt of the legal basis for the Letter of Demand which referred directly to the Term Loan Agreement and attached a copy of the Agreement;
(b)As found at [40] above, the Deed was written acquiescence by Ms Willock to vary her rights under the Term Loan Agreement;
(c)If Mr Stoddart failed to comply with the Deed, Ms Willock was entitled to make demand for repayment of the Current Debt due under the Term Loan Agreement, and interest calculated in accordance with the Term Loan Agreement;
(d)Accordingly, once demand was made, the Term Loan Agreement became the operative instrument, subject only to the reduction in Mr Stoddart’s liability as provided by the Deed.
[67] The second issue is whether the Letter of Demand amounted to an estoppel as to the amount Ms Willock could demand in repayment under the Term Loan Agreement. It is clear that it could not.
[68]As stated by the Court of Appeal in Hansard v Hansard:8
[5] … As this Court confirmed recently in Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd, a party seeking to rely upon a claim based on estoppel must establish four elements. These are:
(a) The party against whom the estoppel is alleged has acted in a clear and unequivocal manner that has caused the claimant to have a certain belief or expectation.
(b) The claimant has reasonably relied upon that belief or expectation.
(c) The claimant has suffered detriment by relying on the belief or expectation.
(d) It would be unconscionable for the party against whom the estoppel is alleged to depart from the belief or expectation.
[69] There is no evidence that Mr Stoddart relied upon the representation that the amount of his debt was $318,000 or that he suffered detriment as a result of any such
8 Hansard v Hansard [2014] NZCA 562, [2015] 2 NZLR 158, subsequent final judgment of the Court, 22 December 2014, per Lang J; see also Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZLR 567 at [44].
reliance. As far as the Court is aware, he took no action at all upon receipt of the Letter of Demand.
[70] Accordingly, I am satisfied that Mr Stoddart does not have an arguable defence to Ms Willock’s claim that interest began to accrue following the demand for repayment in the Letter of Demand.
[71] The last issue is on what date did interest start to accrue. In her alternative scenario, Ms Nelson calculated interest from 19 March 2018, the date of the Letter of Demand. However, the Letter of Demand itself demanded payment by 2 May 2018.
[72] Clause 2 of the Deed provided that the Current Debt was interest free pending demand. It must follow that if the demand specified a repayment date, interest must run from that date, that is, 2 May 2018.
[73] In accordance with the Term Loan Agreement, the rate of interest is 10 per cent, compounding annually. Having regard to s 23 of the Interest on Money Claims Act 2016, interest should run at that rate until the date of payment.
Result
[74] For all the above reasons, I am satisfied that Mr Stoddart has no defence to a claim by Ms Willock for repayment of the amount due under the Term Loan Agreement as varied by the Deed, which is $483,840.00 plus interest at 10 percent per annum, compounding annually, from 2 May 2018 until the date of payment, and I give judgment accordingly.
Costs
[75] Ms Arthur attached to her submissions a schedule of costs of $16,252 calculated on a 2B basis. I am satisfied that those costs are appropriate and are consistent with the principles in r 14.2 of the High Court Rules.
Order
[76]I order that Mr Stoddart pay Ms Willock:
(a)$483,840.00 plus interest at 10 percent per annum, compounding annually, from 2 May 2018 until the date of payment;
(b) Costs of $16,252.00.
[77] Ms Willock may prepare a draft order for the exact amount owing to the date of judgment which can be sealed by the Registrar.
G J van Bohemen J
0
2
1