Xceda Finance Limited v Gray Estate Limited

[2024] NZHC 3420

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-362

[2024] NZHC 3420

BETWEEN

XCEDA FINANCE LIMITED

Plaintiff

AND

GRAY ESTATE LIMITED

First Defendant

TONY WILLIAM GRAY
Second Defendant

SHANE NATHAN GRAY

Third Defendant

Hearing:	On the Papers
Counsel:	S L Cogan for Plaintiff
Judgment:	18 November 2024

JUDGMENT OF McQUEEN J

[1]        The plaintiff, Xceda Finance Ltd, seeks judgment by default pursuant to r 15.7 of the High Court Rules 2016 (the Rules) against the first and second defendants in this proceeding.1

[2]        The proceedings arise in relation to a Variable Interest Term Loan Agreement (the Loan Agreement) entered into on 21 July 2023 between the plaintiff and the defendants. Under the Loan Agreement, the plaintiff (Xceda Finance Limited) is the lender, the first defendant (Gray Estate Limited) is the borrower and the second and

1      Service of the proceeding has not yet been effected on the third defendant.

XCEDA FINANCE LIMITED v GRAY ESTATE LIMITED [2024] NZHC 3420 [18 November 2024]

third defendants (Messrs Tony Gray and Shane Gray) are the guarantors of the borrower’s obligations.

[3]        The Loan Agreement provides for a principal loan is $1,261,870.42. The key terms of the Loan Agreement are as follows:2

(a)The interest rate on the loan is 11.95 per cent per annum (this is reviewable during the term of the loan).

(b)In the event of default, a margin of 12 per cent per annum over the interest rate is charged on any outstanding balance. This rate is charged from the date of default up until full repayment of the unpaid balance. The interest accrues after, as well as before, judgment is entered.

(c)Payment of $1,337,417.20 is required,3 comprising:

(i)five monthly payments of $12,591.13, the first of which was due on 17 August 2023 and the last due on 17 December 2023; and

(ii)one payment of $1,274,461.55 due on 17 January 2024.

(d)A default occurs if the borrower fails to pay any amount or sum due under the Loan Agreement on its due date.

(e)In the event of default, the borrower is also liable to pay the lender on demand the amount of all costs, charges and expenses (including legal fees and disbursements calculated on a solicitor and own client basis) incurred by the lender in connection with the negotiation, preparation, execution, variation, enforcement and administration of the Loan Agreement and other security documents.

2      The Loan Agreement provides that the plaintiff advanced the loan to the first defendant on the terms and conditions set out in the General Terms and Conditions for Term Loan Agreements.

3      This is the principal loan plus interest accrued over the period of the loan agreement (21 July 2023 to 17 January 2024).

(f)The guarantor(s) indemnify the lender against any loss incurred by the lender from a breach in the due and punctual payment of moneys owed. The guarantor is liable under the guarantee as if it were the sole principal debtor and not merely a surety. The guarantee under the Loan Agreement is in addition to, and not in substitution or replacement of, any guarantee and indemnity granted by the guarantor as part of other security documents signed.

[4]        The first defendant defaulted under the Loan Agreement in failing to make payments on the loan, in breach of the Loan Agreement, on 24 September 2023,     24 October 2023, 24 November 2023, 24 December 2023 and 24 January 2024. Accordingly, interest on the unpaid amounts is now accruing at the default rate (which is calculated on a daily basis until the date of payment). The second and third defendants have also failed, in breach of their guarantee and indemnity, to pay the outstanding amounts under the Loan Agreement.

[5]        On or about 9 October 2023, the plaintiff made a demand on all the defendants for the sum of $1,310,271.42, being the amount then outstanding under the Loan Agreement, to be paid in full by no later than 5:00 pm on 16 October 2023. Despite this demand, all defendants failed to pay the amount demanded or any part thereof.

Issuing proceeding and attempts at service

[6]        On 12 June 2024, the plaintiff commenced a proceeding in this Court claiming damages against the first defendant for breach of the Loan Agreement and against the second and third defendants for breach of guarantee and indemnity, for the following amount:

(a)$1,468,079.51 (being the moneys owed under the Loan Agreement as at 16 May 2024);

(b)interest on moneys owed under the Loan Agreement from 16 May 2024, at the default rate of 23.95 per cent per annum, until the judgment debt is paid in full in accordance with s 22 of the Interest on Money Claims Act 2016 (or alternatively interest in accordance with ss 10 to

12 of the Interest on Money Claims Act from the date of judgment to the date the judgment debt is paid in full); and

(c)costs, charges and expenses payable under the Loan Agreement from 16 May 2024 until the judgment debt is paid in full.

[7]        The plaintiff has provided the Court with an affidavit of Mr Jason Thurston as to service of the proceeding on the defendants. The notice of proceeding, statement of claim and letter from the plaintiff’s lawyer providing initial disclosure (the documents) were served on the first defendant on 4 July 2024, by placing the documents in the letterbox of the registered address for service of the first defendant.4 The second defendant was served in person with the documents on 5 July 2024. However, the third defendant has not been served. Mr Thurston says he has tried various tracing techniques to locate another address for the third defendant, including by asking the second defendant where he was living, but has not been able to locate the third defendant.

Application for judgment to be sealed for liquidated demand

[8]        Where no statement of defence has been filed and the plaintiff seeks relief by way of payment of liquidated demand the process under r 15.7 of the High Court Rules 2016 (Rules) is available. Rule 15.7 relevantly provides:

15.7     Liquidated demand

(1)If the relief claimed by the plaintiff is payment of a liquidated demand in money and the defendant does not file a statement of defence within the number of working days required by the notice of proceeding, the plaintiff may seal judgment in accordance with this rule for a sum not exceeding the sum claimed in the statement of claim and—

(a)interest (if any) payable as of right calculated up to the date of judgment (if interest has been specifically claimed in the statement of claim); and

(b)costs and disbursements as fixed by the Registrar.

(2)If the plaintiff claims costs and disbursements, the plaintiff must file a memorandum setting out the amount claimed and how that amount is calculated, together with any submissions in support of the claim.

4      Pursuant to the Companies Act 1993, s 387(1)(c).

…

(5)For the purpose of this rule and rule 15.9, liquidated demand means a sum that—

(a)has been quantified in, or can be precisely calculated on the basis of, a contract relied on by the plaintiff; or

…

[9]        I am satisfied that the relief claimed by the plaintiff is payment of a liquidated demand in money, as the sum claimed has been quantified on the basis of the Loan Agreement. I am also satisfied that neither the first nor the second defendant has filed a statement of defence within the number of working days required by the notice of proceeding.5 The plaintiff has filed a memorandum of counsel, as required by r 15.7(2) of the Rules, in relation to costs and disbursements.

[10]      The form of judgment is drawn up in a form approved by the Registrar, as required under r 11.6 of the Rules. However, there appears to be an error in the draft judgment in sch 3 to the plaintiff’s memorandum of counsel in that it refers to an interest rate of 10 per cent per annum when the Loan Agreement refers to the interest rate under the Loan Agreement as being 11.95 per cent per annum. In these circumstances, I consider that the reference to the interest rate as 10 per cent per annum in the draft judgment is a typographical error and this can be remedied by directing the plaintiff to file a corrected draft judgment for sealing.

[11]      Accordingly, I consider that I may properly authorise the sealing of judgment against the first and second defendants pursuant to r 15.7(1) of the Rules. This includes interest to be claimed pursuant to the terms of the Loan Agreement until the outstanding debt is paid in full.6

5      A statement of defence was due to be filed and served by the first defendant on 8 August 2024 and by the second defendant on 9 August 2024.

6      Interest on Money Claims Act 2016, s 22.

Result

[12]      Because the first and second defendants have not filed a statement of defence in the Court, judgment is given that the plaintiff recover jointly and severally from the first and second defendants the following sums:

(a)$1,632,675.70 (being the money outstanding under the Loan Agreement as at 4 October 2024);

(b)interest under cl 3.3 of the Loan Agreement, which is to continue to accrue at a rate of 23.95 per cent per annum (calculated on a daily basis) from 4 October 2024 until the judgment debt is paid in full; and

(c)costs and disbursements as set out in sch 2 of the plaintiff’s memorandum of counsel dated 8 November 2024, being $9,582.39.

[13]      I direct the plaintiff to provide the Court with an amended draft judgment for sealing that states that interest is continuing to accrue under the Loan Agreement at the default rate of 23.95 per cent per annum (being a margin of 12 per cent per annum over the interest rate of 11.95 per cent per annum) in accordance with s 22 of the Interest on Money Claims Act 2016.

McQueen J

Solicitors:

Lodder Law Ltd, Auckland for Plaintiff