Auckland engineer Edward Hornsby’s claim of duress and that business acquaintance Tucker Haines held him by the short and curlies in business negotiations was dismissed in the High Court. Having defaulted on a business deal over a Riverhead commercial property, Mr Hornsby could not then belatedly argue their deal was not enforceable because he was under pressure with threats of a mortgagee sale.
Differences between the two followed a 2004 sale. Mr Haines owned property in Duke Street Riverhead used to store relocated houses. Interests associated with Mr Hornsby agreed to buy at $820,000. By mutual agreement this was $30,000 below then market valuation. Mr Haines left $310,000 in on second mortgage. This was to be repaid in tranches over the next five years.
The High Court was told complications followed when the second mortgage payments were not made as agreed. When Mr Haines threatened a mortgagee sale, Mr Hornsby alleged the mortgage was not enforceable, it was merely a legal stratagem; the mortgage was cover allowing Mr Haines to swap his loan for equity in Mr Hornsby’s business and then utilise some $40 million in accumulated tax losses. Meetings between the two in 2008 resulted in successive renegotiations of their deal. Payment of the principal sum owed Mr Haines was rescheduled and then repaid in full over the following nine months. The two then disagreed over what they had agreed. Mr Haines sued for unpaid interest plus the acknowledged $30,000 reduction in the 2004 purchase price; it was a loan, he said.
Mr Hornsby said renegotiations following the threatened mortgagee sale amounted to duress. Mr Haines had him by the short and curlies, he complained. Justice Palmer ruled there was no duress. Mr Haines was entitled to enforce his legal rights and issue a Property Law Act notice threatening a forced sale. The successive agreements were enforceable. Mr Hornsby had guaranteed payment. It was only when sued for unpaid interest did Mr Hornsby object. He had performed without complaint the renegotiated terms for payment of the $310,000 loan, Justice Palmer said. This was an affirmation of the deal he now claimed to be have been extracted under duress. The $30,000 price allowance was also recoverable. It was a loan, not the price of an option to take shares in his business as Mr Hornsby argued.
Hornsby v. Haines – High Court (15.03.18)
18.057