Debt Buyers v Spackman  NZDC 25428
Published 24 January 2019
Deed of guarantee — deed of assignment — liability to pay — Debt Buyers Ltd v Adamson  NZHC 932.
The respondent in this matter was the signatory of a deed of guarantee relating to a residential property development; executing a loan agreement and deed of mortgage in favour of the first company (PFSL). The loan was assigned to PFSL's trustee NZGT and the mortgage to its nominee, PFNL.
Following default in payment under the loan the property was sold leaving a nett shortfall of $93,849. NZGT assigned all of the obligations and assets under the loan to PFSL who subsequently assigned their interests in the shortfall loans, in a deed of assignment, to Debt Buyers Ltd (DBL).
The court was asked to determine what the respondent's liability was to DBL who were seeking to recover a total of $168,874.84. It was noted that how the debt owing was calculated by DBL was unexplained. So with the principal sum owing claimed to be $122,258.37 the remainder was apparently interest.
The court found that the case was on all fours with a previous decision and that it was therefore bound by the decision of Justice Mallon in Debt Buyers Ltd v Adamson. It was accepted by the court that the on the sale of the property the respondent was liable for the outstanding principal sum owing. However as the residual debt had been assigned to DBL but not the right to claim interest owing under the original loan agreement, the respondent was not liable for the interest claimed.
The respondent was therefore found to be liable to pay the outstanding principal sum and judgment was entered against him for the sum of $93,849.33.
Judgment Date: 14 November 2017.