A judge has thrown a lifeline to a Queenstown man being pursued for $4.6 million owed by his father.
Associate Judge John Matthews has rejected UDC Finance's bid in the High Court at Christchurch to make Stacey Rout (31) liable for the debts of his father, Steve Rout.
In a judgement dated February 19 Associate Judge Matthews said Stacey Rout was mainly being sued ''as a guarantor of the indebtedness of his father''.
Steve Rout has left New Zealand to work in the Philippines, but has been on leave in Queenstown for the past few weeks.
Three Steve Rout companies crashed between May 2011 and June 2014, with total debts of $9.2 million.
Stacey Rout acknowledged he had guaranteed UDC's debts but his lawyer Andrew Riches said he did so ''under undue influence''. He said Stacey Rout signed a wide-ranging guarantee in 2007, when he was aged 24.
In an affidavit, Stacey Rout said his father ''pressured'' him into signing.
''I did not feel I was in a position to say no, in particular due to the relationship with my father.
''We have worked together for a long time and at all stages of the business he always decided how things would be run and I merely followed his instructions.''
Stacey Rout claimed he signed the guarantee without reading it and without having the opportunity of legal advice.
He said he and his father ''never argued and for the most part I took his advice and mentorship''.
''[My father] had always been successful in business and I trusted him. He was a figurehead within the Queenstown community.
''I signed the document because my father was comfortable with it and I saw no issue with it.
''I turned up at my father's office and was told `here are the documents; they're fine, please sign them'.''
Associate Judge Matthews noted Stacey Rout left school at 16, without completing school certificate, to work for the family firm as a labourer, before becoming a truck driver and then site supervisor.
UDC was seeking a fast-track summary judgement, but the judge said these applications could be granted only when ''the defendant has no defence''.
Dismissing the finance company's application, Associate Judge Matthews ruled Stacey Rout arguably had a defence.
He was perhaps ''in a relationship of trust and confidence with his father'' and ''relatively young and inexperienced in business'', the judge ruled, and may not have known what he was letting himself in for.
Apart from being employed by one failed company, ''there was no other tangible benefit'' to him in guaranteeing the indebtedness of his father or his three businesses, the judge found.
Stacey Rout was not paid director's fees or a profit share, but simply an hourly wage. While he was a director, but not a shareholder, of one failed firm, and may arguably be responsible for its indebtedness, the judge noted that particular company owed just $303,000 of the $4.6 million UDC claimed.
Attempts to contact Stacey Rout were unsuccessful.
Mr Riches said he did not yet know whether UDC would pursue its legal action to a full court hearing.
Two senior UDC executives approached for comment were both on leave and another Auckland executive said no-one in the company would comment.
by Frank Marvin
