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High Court of New Zealand Decisions |
Last Updated: 11 August 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-8568
BETWEEN GEORGE IAN VICTOR MOLLOY Plaintiff
AND HAMISH JAMES CLARKE Defendant
Hearing: 2 August 2011
Counsel: D G Collecutt for Plaintiff
A Paterson for Defendant
Judgment: 3 August 2011 at 4:00 PM
RESERVED JUDGMENT OF ASSOCIATE JUDGE FAIRE
This judgment was delivered by me on 3 August 2011 at 4 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors: Ewart & Ewart, PO Box 26190, Auckland
Rennie Cox, PO Box 6647, Auckland 1141
MOLLOY V CLARKE HC AK CIV-2010-404-8568 3 August 2011
[1] The plaintiff seeks summary judgment against the defendant in terms of the
prayer for relief contained in the plaintiff’s statement of claim.
[2] There are two causes of action pleaded in the statement of claim.
[3] In the first cause of action the plaintiff seeks judgment for $276,152.64 which is said to be repayment of advances made together with interest.
[4] In the second cause of action the plaintiff pleads breach of a settlement agreement with the defendant and seeks an order appointing an accountant to carry out the accounting to be undertaken as required by the settlement agreement.
[5] A half-day fixture was allocated for this application by Associate Judge Doogue. In the minute issued by his Honour on 31 March 2011, he ordered that the plaintiff had 14 days to file any affidavit in reply and that the plaintiff was to comply with the provisions of r 7.39 as to synopsis, chronology and bundle, 10 working days prior to the fixture and that the defendant was to comply five working days prior to the fixture.
[6] On 27 May 2011 the High Court notified counsel of a fixture for this proceeding for 10 am on 2 August 2011.
[7] The plaintiff did not file his affidavit in reply by 14 April as ordered. In fact, the reply affidavit was not filed until 27 May 2011.
[8] The plaintiff did not file his synopsis, chronology and bundle of documents by 19 July as ordered.
[9] The file was assigned to myself for hearing. I issued a minute on 27 July
2011. I recorded the following:
working days prior to the fixture as ordered by Associate Judge
Doogue on 31 March 2011.
3. This defect must be cured immediately. The plaintiff is put on notice that its default may lead to orders being made pursuant to r 7.48 of the High Court Rules.
[10] The plaintiff remained in default. As at close of business on Friday 29 July no synopsis had been filed. Ms Paterson remained at her chambers on Friday evening in anticipation that something might be received so that she could work on her submissions over the weekend. No synopsis was received by her. At sometime on the weekend a synopsis was faxed to Ms Paterson’s office. However, she did not in fact receive the draft until 9 am on Monday 1 August. The signed copy of the submission was received by her at 11.30 on Monday 1 August.
[11] Ms Paterson complained that there was simply insufficient time to prepare submissions in answer and to do justice to the defendant’s opposition to the plaintiff’s application for summary judgment. Accordingly, she sought orders in the alternative that either:
(a) I dismiss the application for summary judgment; or
(b) Adjourn it for a later fixture date.
[12] In determining Ms Paterson’s application for one or other of the orders I
allowed counsel to address briefly on the merits.
[13] This proceeding arises out of arrangements entered into by the plaintiff and the defendant to develop residential type properties. The plaintiff’s role was principally to provide substantial funding. He is a real estate agent and had hoped to be involved in the sale of the properties. The defendant’s task was principally to find the proposed properties which were suitable for development and to actually arrange the development.
[14] The plaintiff advanced a total of $353,000. Properties at Birkdale Road, Waverley Avenue and Manutara Avenue were located and purchased. The Birkdale property was eventually sold as two properties in November 2009 and in April 2010.
The Waverley Avenue property was sold as two properties, in one case in August
2010 and the other July 2010. The Waverley properties were acquired in the name of
Mr Clark’s company, Benetti Holmes Ltd.
[15] The Manutara Avenue property has been sold, although precise details are not contained in the papers before me. I was simply told of this position from the bar.
[16] The parties fell out. Of the $353,000 which the plaintiff advanced, he has received payments of $106,228.24 leaving a capital balance outstanding in respect of the advances of $246,771.76. That position is agreed in the papers.
[17] The plaintiff seeks interest and costs as well. There is a dispute as to the contractual basis for that part of the claim.
[18] The parties have been engaged in prior proceedings. Those proceedings arose as a result of the plaintiff placing caveats on a number of the properties concerned and also on an additional property which appears not to have been covered initially by the original arrangements which the parties entered into.
[19] The caveat proceedings came before Associate Judge Doogue on
3 September 2010. His Honour’s minute is particularly important, having regard to the issues that now arise between the parties and accordingly I set it out in full:
[1] This caveat needs to be dealt with promptly. Mr Smyth has said that in the very constricted time available to him not all the evidence has been filed that should be filed for the respondent. I therefore direct that the respondent is to file and serve any further affidavits in this proceeding by 9 September 2010.
[2] The applicant is to have until 16 September 2010 to file any affidavits in reply.
[3] The applicants are to file and serve the bundle of relevant documents (filed both for the applicant and respondent) to be filed and served by 5pm 17 September 2010. Because of the timeline, it will not be possible to include any affidavits in reply on the main bundle and they can be included in a supplementary bundle. The pagination of the supplementary bundle should continue on from the last document in the main bundle.
[4] The synopsis for the applicants is to be filed and served by 5 pm 16
September 2010 and the synopsis of the respondent by 5 p.m. 20
September 2010. The synopsis on each side is not to exceed 15 pages.
[5] The proceeding is allocated a fixture commencing at 10 a.m on 21
September 2010 (one half-day).
[6] The parties are agreed that an order can be made by consent that Caveat Number 8566659.1 be removed pursuant to s 143 of Land Transfer Act 1952. It is a condition of that order that the surplus funds remaining after sale are to be held in the trust account of Rennie Cox solicitors on interest bearing terms pending further order of the Court. The surplus funds will be those that are left after payment of:
b) Real estate agent commission;
[7] I will hear counsel further should they wish to make submissions on the detail of the form of these orders.
[8] The application for removal of caveats 8566285.1 and 8572359.1 will be dealt with at the hearing on 21 September 2010. Costs of today’s hearing are reserved to be dealt with following the decision on 21 September 2010.
[20] In [6] of his Honour’s minute there is recorded that it was a condition of the order made that surplus funds remaining after sale are to be held in the trust account of Rennie Cox, solicitors, on interest bearing terms pending further order of the Court. The order then stipulates what is meant by surplus funds.
[21] The papers before me disclose that emails passed between lawyers in which solicitors acting for the defendant, Rennie Cox, confirmed, as at 22 September 2010, that they held a net figure of $83,831.12. Counsel clarified for me from the Bar that those proceeds related to the sale of the Waverley Avenue property.
[22] The Waverley Avenue properties were sold for $408,000 and $382,500 respectively. A real question, therefore, arises as to whether the sum which is held in the trust account of Rennie Cox, solicitors, represents a full compliance with the order made by Associate Judge Doogue. No evidence was provided to me of the existence of any mortgage registered against those titles. Accordingly, I am left with
a very real concern as to whether the defendant complied with the order of Associate Judge Doogue. I can only express it as a concern because there simply is insufficient material before me to make any final determination on the matter.
[23] The caveat proceedings came before Lang J in accordance with Associate Judge Doogue’s minute on 21 September. Again, because it is important in the consideration of the issues which arise on this pleaded summary judgment application, I set out his Honour’s minute:
[1] This morning I was due to hear an application by the applicants for an order removing two caveats that the respondent has lodged against certificates of title to properties that the applicants own.
[2] During the course of the hearing counsel were able to reach agreement regarding the terms on which the caveats could be removed. The agreement also provides a pathway for resolution of all matters currently in dispute. I commend counsel and the parties for their sense in reaching this agreement.
[3] I make orders by consent removing the caveats 8566285.1 and
8572359.1. I do so on the basis of the agreement that counsel have reached and documented this morning.
[4] The issue of costs in relation to this proceeding remains to be resolved. Mr Power has helpfully provided me with a synopsis of his submissions in relation to costs. Mr Smyth is to file a brief memorandum in response by 12 noon on Friday 24 September 2010. Any memorandum by the applicants in response is to be filed and served no later than 5 pm on 24
September 2010. When filing a memoranda counsel should ask the Registry to ensure that the documents are placed on my desk on Friday afternoon so
that I can draft my decision over the weekend.
[24] The agreement recorded in his Honour’s minute has been produced. Again I
set out the full text of the settlement agreement:
1. The parties agree to the caveat in this proceeding being removed on the basis set out at paragraph 6 of the Minute of Associate Judge Doogue of 3rd September 2010, and that the proceeds of the sale may also be dealt with by consent of the parties in writing.
2. The applicant (Clarke) agrees to prepare an accounting for all development costs for the properties at 256 Birkdale Road,
2 Waverley Avenue and 1 Manutara Avenue, which will be supported by invoices, settlement statements or such other proof of payment for the purpose of determining the share of profit payable to Clarke
and the respondent (Molloy). The accounting will be provided to
Molloy by the 5th of October 2010.
3. Clarke and Molloy agree that the proceeds of sale after development costs is to be shared equally.
4. Molloy will prepare a schedule of the amounts advanced by him, together with interest, less any repayments made by Clarke and will provide that to Clarke by 24th September 2010.
5. The parties agree to use their best endeavours to agree upon the actual costs of development, and the amount payable to each party. For the avoidance of doubt, the parties agree that the costs of development include:
(a) Any monies advanced by either party for the purchase of the property, or to undertake development of the property;
(b) Any interest payable on such advances; (c) Real estate commission; and
(d) Reasonable legal fees upon and in connection with the sale.
6. In the event that the parties are unable to agree upon the amounts payable to each other in terms of the accounting to be undertaken as set out in paragraph 2 above, Molloy agrees to issue proceedings seeking an accounting and any other relief by the 14th of October
2011.
[25] There was no material before me indicating what had happened with the proceeds of sale of the Manutara Avenue property. Ms Paterson advised me that her firm did not act. She was unaware of any funds being held in a trust account which, of course, is a requirement of the settlement agreement when it is read in conjunction with Associate Judge Doogue’s minute.
[26] My preliminary view is that the settlement agreement is arguably an accord and satisfaction which discharges previous agreements or arrangements between the parties. I say deliberately “arguable”. In my view, final determination of that question is a matter for trial and not a matter to be resolved on a summary judgment application. I reach that view because paragraph 5 suggests that the amount payable to each party follows the sale of the subject properties. I repeat, however, that this is a preliminary view and is made on the basis that its final determination is a matter for trial.
[27] Rule 12.2 of the High Court Rules requires that a plaintiff satisfy the court that a defendant has no defence to a cause of action in the statement of claim or to a
particular part of any such cause of action. The obligations imposed by the rule have been examined by a number of authorities.
[28] The correct approach to an application for summary judgment by a plaintiff was recently summarised in Krukzeiner v Hanover Finance Ltd1 where the court said:
The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11
PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
[29] Accordingly, my view is that summary judgment is not appropriate. That simply reinforces my view that the application should be dismissed on the two grounds, namely;
(a) For non-compliance of the Court’s directions; and
(b) Because the matter, as pleaded, is not suitable for determination by way of summary judgment.
[30] Normally, where a party is in default, the party would be expected to pay costs which are occasioned by the default. I am not satisfied, in this case, that is appropriate. The defendant’s position, I find, is also unsatisfactory. As I have mentioned, I was told that there were no funds held in respect of the sale of the Manutara Avenue property. That suggests, prima facie, that there is a breach of the settlement agreement. I have already referred to the fact that I have concerns that the order of Associate Judge Doogue, relating to the Waverley Avenue property, may
also not have been strictly complied with by the defendant. It is not possible on the papers before me to express any final view on these two matters. That leads me to the position that until the issues are properly ventilated at trial, it would not be appropriate to make any order for costs. It is for that reason that I have reached the view that costs in relation to the application for summary judgment should be reserved. They are reserved for another reason and that is the reason often referred
to by reference to the Court of Appeal decision in NZI v Philpott.2
[31] The papers and the discussion that I have had counsel have drawn attention, with greater precision, to the real area of inquiry that must be made in this case. The precise benefits of that, of course, will not be known until the matter is finally determined at trial.
[32] My comments in the preceding paragraph are, however, the reasons why I now make a number of orders in relation to this proceeding. They have been made after discussing what is appropriate in terms of time with counsel. Accordingly, I order:
(a) The plaintiff’s application for summary judgment is dismissed and
costs in relation to that application are reserved.
(b) The plaintiff shall file and serve any amended statement of claim by
12 August 2011.
(c) The defendant shall file and serve a statement of defence to any amended statement of claim by 26 August 2011.
(d) The defendant shall produce for inspection by plaintiff’s counsel the defendant’s solicitor’s reporting statement to Mr Clarke and to his companies in respect of the sale of the five properties concerned, namely at Birkdale Road (two) Waverley Avenue (two) and Manutara Avenue by 12 August 2011.
(e) Each party shall file and serve affidavits of documents which comply with the High Court Rules by 9 September.
(f) Any party seeking an interlocutory order or direction (probably an application for taking of accounts pursuant to part 16) shall file and serve the appropriate application by 23 September.
(g) The application shall have as its date of hearing a case management conference at 9.30 am on 4 October 2011. Notice of opposition and affidavits in opposition shall be filed and served by 23 September
2011. In all other respects r 7.19 and the following rules contained in
Part 7 of the High Court Rules shall apply.
[33] A telephone case management conference with counsel shall be held at
9.30 am on 4 October. The following matters will be discussed:
(a) Disposal of, or allocation of, a fixture for any outstanding interlocutory application;
(b) Settlement and whether a mediation or Judicial settlement conference should be ordered; and
(c) Trial duration – the fixing of a trial date and the making of any special trial directions that are required.
[34] In respect of these matters, counsel should have available the number of witnesses to be called and the general scope of the evidence to be covered by them so that an accurate assessment can be made of trial duration. In addition, counsel should be in a position to indicate if any order should be made in relation to experts pursuant to r 9.44. Because the issues requiring resolution at trial will be considered at the conference, memoranda should be filed on a sequential basis so that the defendant has the opportunity of commenting upon the plaintiff’s summary of trial issues. To achieve this, the plaintiff’s memorandum dealing with the above matters shall be filed and served by 26 September and the defendant’s memorandum dealing
with the above matters, and in particular commenting upon conceding or adding to
the list of issues, shall be filed and served by 29 September.
JA Faire
Associate Judge
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URL: http://www.nzlii.org/nz/cases/NZHC/2011/846.html