Krukziener v Hanover Finance Ltd [2008] NZCA 187, 26 June 2008
- Court
- Court of Appeal
- Judgment
- 26 June 2008
- Neutral
- [2008] NZCA 187
Areas of law
Judgment analysis
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Facts
Mr Krukziener guaranteed a loan for his companies from Hanover Finance, which was restructured as part of a joint venture for a property development called 'The Wolfe'. The new loan agreement of 22 November 2002 stipulated that the loan term was tied to the completion of the development. However, the agreement also contained standard 'event of default' and acceleration clauses. One such default event was the non-payment of rates on a separate property owned by the debtor companies, 17 Albert Street. When the companies failed to pay council rates, Hanover relied on this default to accelerate the loan and demanded full payment. Hanover obtained summary judgment in the High Court for over $4.1 million. Mr Krukziener appealed, arguing that there was a prior agreement with Hanover's then-CEO, Mr Finnigan, that the loan could not be called up until the development was complete, and that this raised arguable defences of promissory estoppel, collateral contract, and rectification.
Held
- On a summary judgment application, a court may adopt a 'robust and realistic approach' to conflicting affidavit evidence and reject a defence where the defendant's evidence is inherently lacking in credibility, particularly where it is contradicted by undisputed contemporaneous documents and no plausible explanation is offered for signing an agreement with terms contrary to the alleged prior understanding.
- The doctrine of promissory estoppel cannot be used to enforce a pre-contractual representation that contradicts the express terms of a subsequent written agreement, especially where the party seeking to rely on the estoppel was aware of the inconsistent terms when executing the contract.
- A defence of rectification is not arguable where the evidence establishes that the disputed terms were insisted upon by one party and accepted by the other immediately prior to execution, as this negates the required common continuing intention to the contrary.
- A collateral contract is not arguable where the alleged oral agreement would contradict central terms of the main written contract, such as the lender's right to accelerate a loan upon default.
The appeal is dismissed.
Key passages1
Promissory estoppel is not available to contradict the terms of a contract that resulted from the negotiations in which the alleged promise was made.
“He relies on the negotiations, in other words, not to show a voluntary promise to refrain from existing pre-existing rights, nor to show that Hanover promised to create a new legal relationship, but to contradict the contract that followed the negotiations... We conclude that the defence of promissory estoppel is not available in law.”
Cases mentioned in judgment
Legislation mentioned
- Property Law Act 1952, s 92(1), s 92(6), sch 4 cl 3
- Contractual Remedies Act 1979, s 6