Ballindine Ltd v Roger Hamilton Gower

JurisdictionNew Zealand
CourtHigh Court
JudgeJ P Doogue
Judgment Date23 Jul 2013
Neutral Citation[2013] NZHC 1805
Docket NumberCIV-2013-404-1157

[2013] NZHC 1805



Ballindine Limited
Roger Hamilton Gower
Ean Robert Joyce
Third Party

Mr A Sorrell and Ms A Borchardt for Plaintiff

Mr M Pascariu for Defendant

Application for summary judgment that defendant pay AU$339,796 allegedly owing pursuant to a guarantee — third party (“J”) was co-guarantor — at time guarantee was signed, J was a partner in a law firm and had acted for defendant as his solicitor in the past — common ground that J witnessed defendant's signature and had not explained the effect of the guarantee to defendant or advised him to obtain independent legal advice — whether guarantee was entered into under undue influence — whether it was oppressive for plaintiff to seek to enforce the guarantee due to delay such that the credit contract should be re-opened pursuant to s120(b) Credit Contracts and Consumer Finance Act 2003 (reopening of credit contracts, consumer leases, and buy-back transactions).

At issue was whether the guarantee was entered into under undue influence and whether it was oppressive for B Ltd to seek to enforce the guarantee due to delay such that the credit contract should be re-opened pursuant to s120(b) Credit Contracts and Consumer Finance Act 2003 (“CCCFA”) (reopening of credit contracts, consumer leases, and buy-back transactions).

Held: To establish an arguable defence of undue influence, G had to establish it was arguable that: (a) he was subject to undue influence which involved a relationship of trust and confidence and a transaction calling for explanation; (b) any due influence could be imputed to B Ltd by reason of J being its agent, or the circumstances of the undue influence were known to B Ltd such as to put it on inquiry of the risk of undue influence; and (c) B Ltd did not act to insulate itself from the consequences of that influence.

In certain special cases where there was a fiduciary relationship between parties, trust and confidence was irrebuttably presumed, however, there was no presumption that any influence arising from that relationship was undue. In the case of a solicitor and client, the law took as the starting point that where a disadvantageous transaction had occurred, it was presumed irrebuttably that the solicitor exercised undue influence over the client. There did not have to be proof of actual reposing of trust and confidence in the other party. Another important point was the necessity to give attention to what was alleged to have been the advantage obtained by the solicitor.

The fact that J co-operated with G in the matter of the guarantee did not necessarily mean that J had resumed acting in his capacity as solicitor for G. The possible source of a nexus between the two men was not limited to that of the professional solicitor-client relationship. There was an additional link between them that they were both shareholders in the company which was the principal debtor.

It was not arguable that J acted as solicitor for G and therefore trust and confidence was not presumed. A more likely explanation on the evidence was that G, who was described in the uncontradicted evidence as being an experienced businessman, did not think he needed advice on the wisdom of the guarantee, did not ask for it, and J did not appreciate the need for advice for the same reasons.

There was nothing to prevent one co-guarantor from witnessing the signature of another and simply because that guarantor happened to be a solicitor. No inference arose that he provided legal advice or services to his co-guarantor. If there was no primary liability on the part of J to advise G on these matters there was no misuse of the position of influence which could be sheeted home to B Ltd on the basis that it was liable for the actions of J as its agent or that it had knowledge of the acts or omissions on the part of J which amounted to a breach of the obligations he owed to G. The transaction between B Ltd and G was not one which could arguably be set aside by the court on the grounds of undue influence.

The Court was unlikely to exercise its jurisdiction under CCCFA unless the merits of the case favoured the applicant. Technical points were unlikely to be of great weight, particularly given the important principle that contracts were not lightly to be set aside.

The underlying idea of “oppressive” was that the transaction or some term of it was in contravention of reasonable standards of commercial practice ( GE Custodians v Bartle). G had not put before the Court any evidence about what reasonable standards of commerce required in the circumstances of this case. There was no suggested abuse of power on the part of the lender, or of unequal bargaining power. It was a relevant circumstance that the loan was freely entered into by an experience businessman who would have been able to obtain advice had he wished to. Further, there were difficulties in relying upon the substantive unfairness of the contract in circumstances where there was no real basis for impugning the process by which the contract was entered into.

In the circumstances of this case, such delays as occurred in making demand did not amount to oppressive conduct. G knew that the loan was in default and he was to be taken to have known the terms of the contract included the provision requiring the payment of compound interest. Nor did the fact that B Ltd sought to recover the costs of proceeding against H in Australia represent an oppressive aspect of the credit contract which would justify it being reopened.

Application for summary judgment granted.



The plaintiff, Ballindine Limited, seeks summary judgment to compel the defendant, Mr Gower, to pay AU$339,796.21 allegedly owing pursuant to a guarantee that he signed. Ballindine also seeks payment of legal costs incurred in Australia and New Zealand, costs of this action, and interest. Mr Gower opposes summary judgment as he argues the guarantee was executed whilst he was under undue influence and failure to make demand on him within a reasonable time means it is oppressive for Ballindine to enforce the guarantee.


The undisputed facts are that the defendant provided the guarantee on 23 August 2007 to secure a loan from the plaintiff to Munro Corporation Pty Limited (“Munro”) for AU$100,000. The interest rate was 20% per annum and the default interest rate was 30% per annum. The guarantee was signed by the defendant and co-guarantors, Mr Joyce and Mr Hirst. The guarantors were jointly and severally liable. Mr Joyce and Mr Hirst were the directors of Munro. Mr Gower was a shareholder. The loan agreement had been signed by Mr Hirst in Sydney which allegedly resulted in an urgent situation where Mr Gower signed the guarantee in his car on that same day.


On 23 May 2008, Munro defaulted on repayment of the loan agreement. The balance of the loan and all interest became immediately due. On 19 October 2009, Ballindine obtained a default judgment against Mr Hirst in Australia. Mr Hirst entered into a deed of arrangement with his creditors and Ballindine received AU$4,890.97 in repayment of all sums owing under the loan agreement.


On 12 August 2011, Mr Gower received a demand from Ballindine via email for the amount then owing, which had accrued compound interest. On 31 August 2011, demand was made on Mr Gower in accordance with the terms of the guarantee. Mr Gower denied liability and applied for leave to issue a third party notice against Mr Joyce. The application for leave is unopposed.


At the time when the guarantee was signed, Mr Joyce was a partner in Jones Young Solicitors and had acted for Mr Gower as his solicitor in the past. Mr Gower submits that there were several facets to Mr Joyce's involvement in the signing of the guarantee and the surrounding circumstances. He alleges that Mr Joyce was acting as the solicitor for Ballindine, that he was Mr Gower's solicitor, a director of Munro, an investor in Munro, and a co-guarantor.


It is common ground that Mr Joyce witnessed Mr Gower's signature and had not explained the effect of the guarantee to Mr Gower or advised him to obtain independent legal advice. Ballindine submits that Mr Joyce was not acting for Ballindine and does not know of Mr Joyce acting as solicitor for Mr Gower at the relevant time.


Mr Gower argues that he has two defences to the claim for summary judgment. First, he claims that the guarantee is not enforceable as it was entered into under undue influence. Secondly, he claims that it is oppressive for Ballindine to seek to enforce the guarantee due to delay, and that the solicitor-client costs sought are oppressive.

Summary judgment

Ballindine applies for summary judgment under r 12.2 High Court Rules:

12.2 Judgment when there is no defence or when no cause of action can succeed

  • (1) The court may give judgment against a defendant if the 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].

  • (2) The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff's statement of claim can succeed.


The principles are set out in the judgment of the Court of Appeal in Krukziener v Hanover Finance Ltd: 1

[26] The principles are well settled. 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: Pemberton v Chappell [1987] 1 NZLR 1; (1986) 1 PRNZ 183 (CA). The Court must be left without any real doubt or uncertainty. The...

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