Former Bella Vista Homes director Danny Cancian has lost his appeal against a $1 million-plus judgment against him.
Building supplies company Carters sued the developer over unpaid bills of $1.078m racked up by Bella Vista Homes, which is in liquidation after the failure of its subdivision in The Lakes, Tauranga.
Cancian's case was initially heard in the High Court at Tauranga in October last year when he defended himself.
Carters, a division of Carter Holt Harvey, argued Cancian was personally liable for his former business' bill because he signed a personal guarantee for a line of trade credit.
Cancian, however, argued Carters led him to believe his liability would be limited to $50,000 and the credit limit was raised without his knowledge.
The High Court ruled in Carters' favour and Cancian appealed the ruling in the Court of Appeal.
According to the recently released Court of Appeal finding, Bella Vista Homes Limited sole director Danny John Cancian entered into a credit account application and terms of agreement for supply with Carters in October 2016.
In a letter dated October 21, 2016, Carters confirmed the agreement was granted and the credit limit was set at $50,000. It raised the limit to $800,000 10 days later.
Carters did not notify Bella Vista Homes or Cancian of this decision.
The first supply of product was on November 2, 2016, and it continued regular supply. Bella Vista Homes made regular payments to Carters until about June 2017 and by October 31, 2017, Bella Vista Homes owed $1,078,668.23.
On November 1, 2017, Carters solicitors sent a demand letter to Cancian under the guarantee and later that month Bella Vista Homes was put into liquidation.
In his reserve decision, High Court Justice Edwin Wylie said he found aspects of Cancian's evidence "self-serving" and "uncorroborated" and his version of events made "little commercial sense".
"Why would Carters agree to extend a credit limit to Bella Vista of $800,000 if Mr Cancian's liability, as its sole director, was limited to $50,000?"
Justice Wylie said Cancian's evidence in court that he did not read or check the deed of guarantee and indemnity, trusting the Carters representative, was "implausible".
The judge also found discrepancies in evidence Cancian filed saying he was left with a clear impression Cancian was making up matters as he went along.
Justice Wylie said one piece of Cancian's evidence was, in his view, "fabricated" and Cancian "did not strike [him] as a credible witness".
"Mr Cancian's evidence overall did not impress me. I gained the impression that he was seeking to attribute the blame for Bella Vista's ultimate collapse on other persons/entities, and to distance himself from any responsibility for what occurred."
Justice Wylie ruled in favour of Carters and ordered Cancian to pay the appellant $1.078m, plus interest and costs.
Cancian took his case to the Court of Appeal, and three justices heard evidence at a hearing on June 15. Justice Hinton released the court's written decision yesterday.
At the hearing, Cancian argued the increased credit limit was a material variation to the terms of the agreement Bella Vista Homes had with Carters.
However, Carters disagreed and said even if it was a variation the guarantee was unaffected because it gives the creditor power to vary the agreement and expressly provides the guarantor was not to be discharged as a result.
Carters also argued Cancian was liable to pay the money owed in any event as the principal debtor under the guarantee.
Cancian's lawyer submitted Justice Wylie had erred in not treating the increase in the credit limit as a variation to the anti-discharge provision of the agreement.
He also said a reasonable person in Cancian's position would not have contemplated, when the $50,000 credit limit was set, that it would be extended to $800,000 without notification.
Court of Appeal Justice Anne Hinton said she and the other two justices agreed with Carters' submission there had been no variation to the agreement by increasing the credit limit.
"The guarantee entered into with Carters allowed the company to alter the credit limit without notice, and any subsequent change did not constitute a variation to the agreement.
"We are quite satisfied that a very substantial increase in the credit limit, without
notification to either Bella Vista Homes or Mr Cancian, was within the general purview of the guarantee," Justice Hinton said.
"Mr Cancian has no defence to Carters' claim. The appeal is dismissed."
Cancian has also been ordered to pay Carters costs for the appeal.