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Holmfirth Limited v Hoyle [2012] NZHC 1619 (5 July 2012)

Last Updated: 10 July 2012

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2011-409-001698 [2012] NZHC 1619

UNDER the Companies Act 1993

IN THE MATTER OF a proceeding to set aside a statutory demand

BETWEEN HOLMFIRTH LIMITED Plaintiff

AND ALMA SHIRLEY HOYLE Defendant

Hearing: 16 May 2012

Appearances: O G Paulsen for Plaintiff

D M Lester for Defendant

Judgment: 5 July 2012

_{RESERVED JUDGMENT OF ASSOCIATE JUDGE MATTHEWS}

[1] The plaintiff (Holmfirth) is the sole trustee of the Holmfirth Trust. The directors are Christopher Hoyle, his sister Adrienne Hoyle, and his mother, the respondent, Alma Shirley Hoyle. The directors hold all the shares, equally. By the constitution of the plaintiff they are required to act unanimously. On 8 August 2011

Alma Hoyle issued a statutory demand against Holmfirth under s 289 of the Companies Act 1993 demanding payment of the sum of $1,472,793.23, said to be a debt owed to her pursuant to a Deed of Sale and Acknowledgement of Debt dated

_{4 April 2008.}

Solicitors:

Cavell Leitch Pringle & Boyle, PO Box 799, Christchurch. Email: owen.paulsen@cavell.co.nz

_{Helmores Lawyers, PO Box 471, Rangiora 7440. Email:} dmlester@xtra.co.nz

HOLMFIRTH LIMITED V ALMA SHIRLEY HOYLE HC CHCH CIV-2011-409-001698 [5 July 2012]

[2] Christopher Hoyle seeks leave for Holmfirth to bring this proceeding, a direction that any costs ordered to be paid by him be paid by Holmfirth, and an order setting aside the statutory demand.

[3] Alma Hoyle does not oppose the application being brought by Holmfirth. She opposes each of the other orders.

Background facts

[4] Arnold Trevor Hoyle was the husband of Alma Shirley Hoyle, and the father of Adrienne and Christopher Hoyle. He died in May 2008 at the age of 82. Prior to his death all four family members were partners in Casa Holdings Partnership, and each owned a one-quarter share of a commercial property at 11A Sheffield Crescent, Christchurch. The income derived from this property was shared by the four partners equally.

[5] Prior to his death Arnold Hoyle took advice with a view to structuring his affairs in such a way that after his death his assets would earn income which would ensure so far as possible the wellbeing of Alma and Adrienne, who are now aged 82 and 50, and live in separate facilities which provide for their care. Records kept at the time show that Arnold Hoyle also wished the arrangement of his affairs to recognise that Christopher and his children should be included in all investment decisions and distributions.

[6] The advice Arnold Hoyle received was to set up a trust, with a company as sole trustee which he and Alma would direct until his death. They would transfer all their assets to the trust and if Arnold reached a point where his business acumen diminished, Christopher would deal with commercial matters, as he is a highly qualified and experienced lawyer.

[7] As part of this proposed arrangement Arnold and Alma would have made wills by which they would forgive debts owing to them by the trust, represented by the assets transferred. However, before the proposed arrangements were put in place Arnold Hoyle died. His estate passed to his widow, and the majority of their assets

passed to her as survivor under joint tenancies. As a result of this development the family referred the position back to the advisors who had been engaged earlier.

[8] Subsequently the following steps were taken:

(a) Holmfirth Limited was incorporated on 1 April 2008 to act as a trustee with Alma, Adrienne and Christopher as sole directors and shareholders.

(b) The Holmfirth Trust was established by deed of trust dated 2 April

2008 with Holmfirth Limited as sole trustee.

(c) A deed of family arrangement was entered on 4 April 2008.

(d) Debts in the estate and pecuniary legacies were satisfied from cash derived from a life policy and the residue of the estate amounting to some $187,000 was transferred to the Trust by way of advance repayable on demand.

(e) On 4 April 2008 Alma sold to the Trust the assets which she owned, including those acquired from her late husband by survivorship, for the sum of $1,387,762.50 with an acknowledgement of debt from Holmfirth that this sum was payable upon demand.

(f) In November 2008 shares in the Sheffield Crescent property were transferred into the Trust by Alma, Christopher and Adrienne, and the Casa Partnership was wound up.

(g) The interests of Adrienne and Christopher in Arnold’s estate were

transferred to the Trust.

[9] On 3 April 2008 Alma Hoyle executed a document titled “Letter of Guidance” to Holmfirth which contains a number of provisions of relevance to the issues which have now arisen between Christopher Hoyle, on one hand, and Alma and Adrienne Hoyle on the other hand. These include the following:

1.1 I, Alma Shirley Hoyle request you, the Trustee of the Holmfirth Trust (“the Trust”), take into account my wishes as set out below in the administration and management of the Trust.

1.2 I have set up the Trust to ensure that me(sic) and my children are able to benefit from the capital and income of the Trust from time to time.

1.3 This Letter is intended for the guidance of you and any subsequent Trustees. It has no legal effect and is not intended in any way to fetter the discretionary power vested in you under the Trust Deed.

1.4 This Letter may be revoked or varied by me, by another Letter, at any time during my lifetime and after my lifetime by my legal personal representatives.

[10] The document then set out provisions relating to the transfer of the assets to the Trust, and continued:

2.5 It is intended that in the lifetime of the Settlor the capital shall be preserved and the income shall be applied primarily for the benefit of me, the Settlor, and my daughter Adrienne Mary Hoyle to maintain a good standard of living for me and to provide for all my reasonable needs during my lifetime.

2.6 It is intended that the Trust is to provide for assets to be protected for my children or, if they predecease me then for future generations of my family within the framework of the Trust Deed.

...

3.1 It is my wish, that any time when I am unable to express my wishes directly to the Trustees of the Trust, in exercising their discretion the following principles should guide the Trustees:

3.1.1 On my death the Trust fund is to be used for the benefit of my children. Should my children die before me, their interest in the Trust devolves to my grandchildren.

3.1.2 Benefits should be made available for the purpose of education, health, general welfare, maintenance, ill-being(sic) and general recreational needs of the beneficiaries.

3.1.3 As much as possible distributions to beneficiaries should be sourced from the income of the Trust, although capital advances may be made by the Trust if, in the opinion of the Trustees, such capital advances will be used for proper and productive purposes.

[11] After a provision concerning timing and consultation in relation to distributions the document continued:

4. WINDING UP OF TRUST

4.1 The Trust should not be wound up until I have died.

4.2 On the winding up of the Trust I wish the Trust Fund then remaining to be distributed as set out in paragraph 3.1.

[12] In his first affidavit Christopher Hoyle deposed that at the time the Trust was established his mother also made representations to him that the Trust would be maintained during her lifetime and she would not call up the advances she made to the Trust. He also considered these to be implicit in the advice received on the transaction, the deed of family arrangement the parties executed and the manner in which the Trust was structured and operated. He said the representations were important to him, were relied upon by him, and it was on the basis of those representations that he entered into the deed of family arrangement and transferred assets to the Trust. Had these representations not been made the Trust would not have been established, nor Holmfirth incorporated.

[13] In her affidavit in response Alma Hoyle deposed that she does not accept that she gave Christopher any assurances that she would not call up her debt, this is not reflected in the way the debt has been dealt with in the past, and that in any event there is nothing unjust in her calling up the debt as any potential prejudice to Christopher will be addressed by reversing the steps he took in reliance on the representations he claims were made. Alma further deposed that she and Adrienne “are quite content to have the Trust transfer to him his quarter share in the property. That will return him to the position he was in prior to the Trust being created”. She further stated:

I undertake and confirm that to the full extent necessary to restore Christopher to the position he was in prior to the transfer, less any benefits received as a result of the transfer, the Trust will make those arrangements. I can say that with confidence as, because the vast majority of the debt is owed to me, I can and will simply forego any distribution necessary to give effect to this assurance. Adrienne’s consent to this arrangement is attached at page 8.

[14] In his affidavit in reply Christopher Hoyle reaffirmed his evidence in relation to representations he said his mother had made, and then said:

My mother communicated her intention to me that the Trust would survive her. Until recently, it was always my understanding that my mother would not call up her advances to the Trust and effectively collapse the Trust. As stated in paragraph 40 of my previous affidavit, it has only been in recent months that my mother has spoken to me of considering a collapse of the Trust.

[15] Alma Hoyle made two demands for repayment of advances, one on

23 January 2009 for $95,000 to enable her to purchase a residential care unit, and the other on 29 January 2009 for $10,161.88 to meet legal fees. Although these were both demands for repayment of capital advances, and payments were made by Holmfirth, it seems on the information available to me that in the accounts for the Trust, to which all parties have agreed, the sums paid to Alma Hoyle were treated as distributions.

[16] In the first of these demands Alma Hoyle also stated:

I wish to signify at this point and make it clear to both my daughter, Adrienne and my son, Christopher that at this time in my life my personal and financial affairs are paramount. If at any point I consider that my best interests are not being implemented by the continued operation of the Trust, I will review the whole matter and may well call in further monies up to and including the whole of the balance due to me notwithstanding that part of that sum is presently invested through the rented property at Sheffield Crescent.

[17] When Christopher Hoyle was in New Zealand for Christmas 2010 Alma Hoyle agreed to make quarterly payments from the Trust to his children of $9,000, a sum equalling the quarterly payments made by the Trust to Adrienne. A bank mandate to that effect was signed and sent to the bank. Subsequently Alma Hoyle cancelled it, without explanation to Christopher. It had been due to commence in April 2011. Since the Trust commenced the majority of the income has been applied to Alma and Adrienne. Total payments to Christopher amount to just over $6,000 to the end of 2010, compared with approximately $150,000 for Alma and around

$75,000 for Adrienne.

[18] After that the relationships between Christopher and his mother and his sister deteriorated; correspondence ensued between the parties’ respective solicitors which I need not canvass, save to note that on 19 April 2011 the solicitors representing Alma Hoyle and Adrienne Hoyle wrote to the solicitors representing Christopher and stated:

In view of the actions of your client, we advise that Shirley Hoyle will be calling for repayment of the loan she has made to the trust. Perusing balance sheet assets, it seems this may make the trust insolvent.

[19] A statutory demand was issued on 8 August 2011 requiring payment by

Holmfirth of the sum of $1,472,793.23.

Relevant law: setting aside a statutory demand

[20] The application is brought under s 290(4)(a) and (d) of the Companies Act

1993 which provide:

(4) The Court may grant an application to set aside a statutory demand if it is satisfied that –

(a) There is a substantial dispute whether or not the debt is owing or is

due; or

(b) ...

(c) The demand ought to be set aside on other grounds.

[21] For an order to be made setting aside the demand, the plaintiff must show a fairly arguable basis on which it is not liable for the amount claimed. Mere assertion is not enough; material, short of proof, which backs up the claim that the amount is in dispute is required.[1]

[22] It is not the role of this Court sitting in its jurisdiction under the Companies

Act to resolve any dispute which may be found to exist; it is sufficient if it is found that a substantial dispute exists.

The case for the applicant

[23] Mr Paulsen submitted that Alma Hoyle made two representations:

• The Trust would be maintained during her lifetime.

• She would not call up the advances she made to the Trust to acquire the

Trust assets.

[24] Mr Paulsen submitted that these representations give rise to an equitable estoppel enforceable by Holmfirth, alternatively a legal estoppel by convention, and amount to a contractual obligation also enforceable by Holmfirth.

Estoppel

[25] Mr Paulsen argued that Alma Hoyle is estopped from proceeding with her statutory demand by the principles of equitable estoppel, and by the principles of estoppel by convention. The latter is a common law estoppel.[2] Whether equitable estoppel and common law estoppel should now be regarded as separate is the subject of judicial observations in a number of cases.[3]

[26] In New Zealand courts have identified that to establish an equitable estoppel by representation a party alleging an estoppel must establish the following elements:

(a) A belief or expectation has been created or encouraged through some action, representation, or omission to act by the party against whom the estoppel is alleged;

(b) the belief or expectation has been reasonably relied on by the party alleging the estoppel;

(c) detriment will be suffered if the belief or expectation is departed from;

and

(d) it would be unconscionable for the party against whom the estoppel is alleged to depart from the belief or expectation.[4]

[27] The elements to be established for an estoppel by convention were summarised in National Westminster Finance NZ Ltd v National Bank of NZ Ltd (supra) thus:

1. The parties have proceeded on the basis of an underlying assumption of fact, law, or both, of sufficient certainty to be enforceable (the assumption).

2. Each party has, to the knowledge of the other, expressly or by implication accepted the assumption as being true for the purposes of the transaction.

3. Such acceptance was intended to affect their legal relations in the sense that it was intended to govern the legal position between them.

4. The proponent was entitled to act and has, as the other party knew or intended, acted in reliance upon the assumption being regarded as true and binding.

5. The proponent would suffer detriment if the other party were allowed to resile or depart from the assumption.

6. In all the circumstances it would be unconscionable to allow the other party to resile or depart from the assumption.

[28] This form of estoppel was described in more general terms in Vector Gas Ltd v Bay of Plenty Energy Ltd:[5]

Estoppel by convention, which is a form of promissory estoppel, is of particular importance, because it prevents unfair departures from common understandings between the parties, on which they have acted.

[29] The differences between these two forms of estoppel are the subject of a significant body of judicial comment and academic analysis. Given that on this application the issue before the Court is whether a substantial dispute exists, rather than its outcome, it is not necessary to engage in that analysis. The applicant relied on both forms of estoppel; I will therefore proceed to consider the evidence in relation to the relevant elements, starting with representation (for equitable estoppel), followed by underlying assumption of fact (for estoppel by convention). I will then examine the evidence on reliance and detriment, and unconscionability.

Representation

[30] I am satisfied for the purposes of an application of this kind that a representation was made by Alma that the Trust would be maintained during her lifetime and that she would not call up the advances she made to the Trust. There is conflicting evidence on this point ([12] and [13] above). In my opinion this cannot be resolved on the affidavit evidence before me.

[31] Mr Lester emphasised what he saw as differences in the way Christopher Hoyle described his mother’s statements in his first and second affidavits, and in particular his reference to his mother speaking of a collapse of the Trust, which is not mentioned in his first affidavit and is, in Mr Lester’s submission, a material difference: a narrower representation than the broadly-based statement that Alma Hoyle would not call up the advances during her lifetime. Mr Paulsen countered that argument with a submission that this rider or gloss on the earlier evidence of Mr Hoyle originated with Alma Hoyle. This cannot safely be determined without cross-examination. In any event, I do not consider the point to be material to this application, because the demand in issue would in fact “collapse the trust” so if either form of representation were established on oral evidence it would cover the present position. If there is a difference in Christopher Hoyle’s evidence on what was said, that is a matter for assessment of credibility after cross-examination, not on the present affidavit evidence.

[32] Mr Lester developed the point by pointing out that Christopher Hoyle had in fact accepted two previous payment demands, which he saw as materially diminishing the likelihood that the representations were made. Again, I do not agree. It is in my view perfectly possible that the representations were made, yet for good reasons (particularly in a family context) Christopher Hoyle agreed to payments being made to his mother to assist her in purchasing a unit for residential care, and to pay her legal fees. The fact that occurred (leaving aside whether the accounts accurately record them as drawings or whether they should be shown as repayments) merely shows that on those two occasions Christopher Hoyle waived his right to rely on the representation. Doing so in the context of this family arrangement cannot be held against him. It only means that for those two particular purposes, and for the sums demanded, Christopher was prepared to go along with his mother’s wishes.

[33] A more difficult issue arises from the party to whom the representations were made. Plainly they were made to Christopher, but Christopher is not the applicant. The trustee of the Trust is. It seems on the evidence before me that the trustee had been incorporated at the time the representations were said to have been made, and entered upon its duties under the direction of Alma, Adrienne and Christopher. Mr Paulsen submitted that the representations were part of the very basis upon which the company was incorporated and assumed its trustee obligations.

[34] In the context of four parties, three individuals and a company, entering a significant rearrangement of the affairs of the individuals, with the company assuming correspondingly significant obligations to carry out professional duties as a consequence, I am reluctant to draw the line Mr Lester invited me to draw on an application of this kind. In the overall context of the arrangements being made it is in my opinion sufficiently arguable that the representation was made as much to the applicant company as it was to Christopher.

[35] Drawing a line in relation to the identity of the representee is unnecessary if the facts are considered to give rise to an estoppel by convention, as discussed later.

Underlying assumption of fact

[36] To establish an estoppel by convention it must be shown that the parties have proceeded on the basis of an underlying assumption of fact of sufficient certainty to be enforceable and that each party has to the knowledge of the other, expressly or by implication, accepted the assumption as being true for the purposes of the transaction. The assumption of fact relied upon by the applicant is that the Trust would be maintained in the lifetime of Alma and that she would not call up her debt. The assumption of this fact by all parties may be drawn from their overall agreement to set up the Trust, transfer all their separate assets into it, give up their individual control of their own assets, and assume governance of an institution of joint control. It is arguable in my view that all parties went into this arrangement on the basis that it was going to be the way that their affairs were conducted whilst Alma remained alive. Broadly it reflected the late Arnold Hoyle’s wishes. At a practical level it had the effect of potentially maximising income for Alma and Adrienne because the income from Christopher’s shares of the assets was derived by the Trust and could be appropriated to them (as in fact, at least in major part, it was). Equally it is established that each party, to the knowledge of the other, expressly accepted this factual position as the basis upon which each of them agreed to, and in fact did, proceed.

[37] I have not overlooked the reservation expressed by Alma in paragraph 1.4 in her letter of guidance signed on 3 April 2008 ([9] above). The letter of guidance as a whole, however, set out intentions consistent with the overall arrangement the parties had come to, and paragraph 1.4 does not imply an intention to resile from it, as is now manifest in Alma Hoyle’s position. The documents executed at the time this arrangement was put in place are consistent. Certainly paragraph 1.4 makes it clear that Alma Hoyle may change the guidance she wished to give to the trustee, but it must be remembered that her guidance to the trustee is just that, and the trustee has its own duties to act, with or without taking into account any guidance Alma Hoyle might proffer.

[38] Nor have I overlooked the very different statement made by Alma Hoyle in her demand in January 2009 for a sum with which to purchase a residential care unit

([15] and [16]). That, however, is a statement after the event. Given the arrangement which had been put in place, it portrays, possibly, a change of heart but it cannot be inferred from it that the arrangements which are relied upon for the purposes of this application, and the representations said to have been made when those arrangements were entered, could by a change of mind be reversed or unwound when both Christopher and Adrienne had reorganised their financial affairs in reliance upon them, and Holmfirth had entered upon its duties as trustee of their former assets accordingly.

[39] By reference to the third identified element of an estoppel by convention, it is again arguable that the acceptance of the position by the parties was intended to affect their legal relations and govern the legal position between them.

Reliance and detriment

[40] I am satisfied that it is strongly arguable that Christopher Hoyle not only relied on the statements he maintains that Alma Hoyle made, but also that he did so to his detriment. He transferred into the Trust his quarter share in the commercial property, and his residual interest in his late father’s estate. He abdicated his right to full control over those assets, and to receipt of the income derived from them, to Holmfirth through which he had but one vote in three, and which could only act, by its own constitution, on a unanimous resolution of its directors. In short, he put these aspects of his own affairs in the hands of his mother and his sister, equally with himself.

[41] Further, he has agreed to substantial allocations of income to Alma and to Adrienne some of which was derived from the assets which he had foregone. Neither he nor his children has received any significant income from the Trust. His attempts to have some income paid to his children, though initially agreed upon, were then blocked.

[42] Whether Holmfirth has also relied to its detriment on the statements relied upon as founding an equitable estoppel is, again, a different issue. As with the parallel issue in relation to representation (discussed above at [33]), I think it

unrealistic to draw the distinction in a multi-party agreement where the onus is on Holmfirth only to show an arguable case. Again, however, this issue does not arise in a consideration of estoppel by convention.

Unconscionability

[43] Common to both forms of estoppel is a need to establish overall unconscionable behaviour. It is strongly arguable that whether Alma Hoyle’s actions in calling up her debt are seen as contrary to representations she made at the time this transaction was entered into, or whether it is seen as an attempt to implode the underlying assumptions of fact accepted by the parties in entering this transaction, it would be unconscionable to allow her to do so. From the perspective of Christopher Hoyle, were Holmfirth to comply with the demand he would lose his inheritance from his late father and his former interest in the commercial property which he transferred to the Trust.

[44] Accordingly it is arguable that Alma is stopped, both in equity and by estoppel by convention, from demanding repayment of at least part of her debt.

[45] Mr Lester said that Alma Hoyle would agree to her demand being satisfied by payment to her of a sum which left in the Trust sufficient to account to Christopher Hoyle for the advances he had made to the Trust to enable it to purchase his former property. He submitted that if one form or another of estoppel is seen as being an arguable defence to the demand which has been issued, it could only be a defence to the extent necessary to alleviate the detriment established. Mr Lester presented some broad arithmetical calculations which he submitted were maximum sums which would adequately protect Christopher Hoyle’s interest in the Trust based on the values of the assets which he contributed to it, with adjustments for lost income.

[46] Whilst I accept Mr Lester’s submission in relation to the equitable estoppel relied upon by the applicant, it is less clear whether this principle applies to estoppel by convention which is derived from common law. However, given that detriment to the party propounding the estoppel, and unconscionability, are established elements required to be present for an estoppel by convention, as they are with an equitable estoppel, I accept for the purposes of this application that the intervention

of the Court will similarly be limited to the extent necessary to correct the injustice which would otherwise occur.[6]

[47] Argument by counsel in relation to detriment and unconscionability was focused principally on the significant value of Christopher Hoyle’s interest in his late father’s estate and his interest as a one-quarter share owner in the family commercial property. These formed the basis of Mr Lester’s attempt at placing an approximate figure on the sum which might reasonably be found to be in dispute, but sight must not be lost of the overall transaction that the parties entered. In addition to vesting these assets in the Trust, Christopher Hoyle (and for that matter, Adrienne Hoyle) both derived the benefit of Alma Hoyle having vested her assets in the Trust, thereby placing them outside her estate and thus the terms of her will on her death. Under clause 13 of the Trust Deed, it is the trustee, Holmfirth, which has the power to appoint the capital and income of the trust fund among the discretionary beneficiaries, who are defined as Alma, Christopher, Adrienne and Alma’s grandchildren being Christopher’s children. The class also includes any other person for whom Alma, as settlor, has natural love and affection who she may have appointed as a member of the class by deed, but there is no evidence that this step has been taken at this point. In the absence of appointment the beneficiaries are the children of the settlor, Alma, living at the vesting day (with substitution of the children of either who may have predeceased). Therefore, in the absence of appointment by Holmfirth, which requires a unanimous decision of the three directors as noted earlier, Christopher has an interest in a one-third share in the Trust.

[48] On the evidence the benefit of this to Christopher may be illusory as the debts of the Trust roughly equate its assets. However, that is not necessarily conclusive of this issue. Exhibit G to the affidavit of Christopher Hoyle is a report to Alma, Christopher and Adrienne Hoyle dated 25 March 2008 from Mr Mather, solicitor. He advised not only the late Arnold Hoyle, but also Alma in relation to Arnold’s intended action and the arrangement put in place after his death. Express reference

_{is made to Alma Hoyle making a will which would forgive the acknowledgement of}

debt which is in issue in this proceeding. Further reference is made to a will in these terms in a letter written by Mr Mather to Alma, Christopher and Adrienne on

28 March 2008 which set out the scheme which was proposed.

[49] Although the Court is not aware of whether Alma Hoyle has made and kept in place a will having this effect, the letter of guidance she executed on 3 April 2008 sets out, in paragraph 3, her wishes upon her death. These include a wish that the trust fund be used for the benefit of her children, the making available of benefits for education and other family welfare purposes, and other aspirations which involve the Trust actually having funds. This is consistent with the debt having been forgiven upon her death, but inconsistent with the Trust having a debt roughly equating its assets, which is the position unless the debt is forgiven. It may be arguable, therefore, that there is a further benefit to Christopher arising from Alma having placed her assets in the Trust with an agreement to forgive her debt as part of the overall arrangement.

[50] If it were established that forgiveness of debt by Alma, by her will, was an underlying assumption of fact relied upon by all parties, there may be an arguable case for an estoppel by convention in relation, also, to this aspect of the transaction. I couch my discussion on this point in these terms because I did not hear argument on it.

[51] In the result, therefore, on the material before me I cannot form a sufficiently defined view on whether there is any part of the debt to Alma which is not the subject of a substantial dispute. Detriment in relation to possible loss of Christopher’s one-quarter share in his father’s estate and his one-quarter share of the commercial property has not been quantified other than in the most general terms, and the potential detriment to him of Alma calling up her debt rather than forgiving it by will was neither the subject of detailed argument, nor the subject of evidence on the extent of the detriment.

[52] There are other unclear elements of the financial position. The latest accounts produced to the Court, as at 31 March 2010, record Alma Hoyle’s loan as being $1,472,793. There is no reference to any loans by either Christopher or

Adrienne to represent the quarter shares in the commercial property which they contributed. There is also a debt to Arnold Hoyle’s estate. It is not clear whether that does, or does not, include the interests of Christopher and Adrienne in that estate.

[53] Mr Lester argued that it was the responsibility of the applicant to satisfy the Court that the entire debt is in dispute. Whilst I accept that submission, this issue is not expressly raised in the notice of opposition to the application, and applications to set aside statutory demands must necessarily be made with an element of haste given the time limits imposed by the Companies Act, and the consequence of a notice not having been satisfied.

[54] I cannot make a final decision on the extent, if any, to which the debt to which this application relates is not the subject of a substantial dispute.

Contract

[55] Mr Paulsen also argued that the plaintiff has a right to enforcement of the promise made by Alma not to call up the debt during her lifetime, based on contract. Mr Lester argued that this is not tenable. As I have decided that Alma Hoyle is estopped from calling up her debt to the extent of the detriment to Christopher Hoyle, it is unnecessary to determine this issue.

Outcome

[56] I find that Alma Hoyle is estopped from calling up her debt to the extent of the detriment to Christopher Hoyle that would be caused thereby.

[57] This judgment is issued on an interim basis. I reserve leave to the parties to file further evidence by way of affidavits on the extent in monetary terms of the detriment to Christopher Hoyle and to make further submissions (to the extent necessary) in relation to that evidence and the effect it has on the statutory demand.

[58] All further affidavits by the plaintiff are to be filed and served within 20 working days, and by the defendant within a further 15 working days. Argument

will resume on 26 October 2012 at 10 am (half day reserved). Submissions by the plaintiff are to be filed and served 10 clear working days before the hearing and by the defendant five clear working days before the hearing.

_{[59] Costs are reserved.}

J G Matthews

Associate Judge

[1] Focus International Export Ltd v Honeywell Ltd HC Auckland M134-IM99

28 May 1999 at [7] – see also cases there cited.

[2] _{R P Meagher and others, Meagher Gummow and Lehane’s Equity Doctrines and Remedies}

₍₄th _{ed, LexisNexis Butterworths, Chatswood (NSW), 2002) at 540.}

[3] See Commonwealth v Verwayen (1990) 170 CLR 394 at 413 (Mason CJ) 445 (Deane J) and

487 (Gaudron J); Gold Star Insurance Co Ltd v Gaunt [1998] 3 NZLR 80 (CA);

_{National Westminster Finance NZ Ltd v National Bank of NZ Ltd [1996] 1 NZLR 548 (CA).}

See also discussion in A Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [19.1.3 (3)] and G E Dal Pont Equity and Trusts in Australia (5th ed Lawbook Co, Sydney, 2011) at [10.95].

[4] Hawke v B R Metcalfe Construction Ltd HC Hamilton AP131/90, 5 June 1992 Gold Star Insurance Co Ltd v Gaunt [1998] 3 NZLR 80 (CA), Gillies v Keogh [1989] _{2 NZLR 327.}

[5] Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5 at [74] per McGrath J

See also F Miller, “Equitable Estoppel” NZLS Intensive: The Law of Obligations (2007) at 52, Miller J

[6] On estoppel by convention generally see articles by Dr Rory Derham, “Estoppel by Convention”

(1997) 71 ALJ 860 and 976