Nation Land Assets Limited v Waiwera Heights Country Club Limited [2020] NZHC 3110, 24 November 2020
- Court
- High Court
- Judgment
- 24 November 2020
- Neutral
- [2020] NZHC 3110
Areas of law
Judgment analysis
AI-generated summary
It can misstate holdings, facts, or citations. Always confirm against the judgment PDF.
Facts
On 31 January 2019, the plaintiff advanced USD 1 million to the first defendant under a loan agreement, with the loan secured by a mortgage over property owned by the first defendant and guarantees from the other defendants. The loan was repayable after 12 months, on 1 February 2020. The agreement stipulated an interest rate of 11% per annum and a default interest rate of 24% per annum above that (effectively 35%). The first defendant failed to repay the principal sum on the due date and has not paid interest since. The plaintiff issued a notice under the Property Law Act 2007 on 24 February 2020, which expired unremedied. The plaintiff then applied for summary judgment as a debt collection exercise.
Held
- Where a borrower and its guarantors default on a commercial loan agreement, fail to remedy the default after being served with a Property Law Act notice, and present no reasonably arguable defence, the lender is entitled to summary judgment for the principal sum, contractually stipulated default interest, and costs on a full indemnity basis.
Orders
Judgment for the plaintiff against all defendants jointly and severally in the sum of USD 1,445,919.62, with interest continuing to accrue at 35 per cent per annum, compounded monthly, until payment. Costs and expenses awarded to the plaintiff against the defendants jointly and severally in the sum of NZD 60,201.70.
Key passages3
Summary judgment is available where there is no reasonably arguable defence to the claim.
“There is no reasonably arguable defence on the face of the material before the Court. The plaintiff is entitled to summary judgment.”
A high compounding penalty interest rate (35% per annum) can be enforced where it is part of a commercial agreement and the defendants took no issue with it at the time of execution.
“First, as noted, the penalty interest rate is a compounding interest rate, effectively 35 per cent per annum penalty rate. The documents executed by the defendants were commercial documents. The defendants took no issue with those rates at the time.”
A contractual clause providing for the payment of legal costs on a full indemnity basis for the enforcement of rights under an agreement is enforceable.
“The Borrower shall pay to the Lender Upon Demand all costs and expenses (including but not limited to legal costs and disbursements on a full indemnity basis) incurred by the Lender in connection with ... enforcement or preservation of ... any rights under this Agreement ... or suing for or recovering any sum due from the Borrower under this Agreement.”
Legislation mentioned
- Property Law Act 2007