Prescott v Roberts [2012] NZHC 1511 (29 June 2012)

Last Updated: 6 July 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-001128 [2012] NZHC 1511

BETWEEN PETER RICHARD PRESCOTT Plaintiff

AND GRAHAM BRUCE ROBERTS First Defendant

AND TURNERS CAR AUCTIONS Second Defendant

Hearing: 26 June 2012

Appearances: Plaintiff in person

J A Wickes for Defendants

Judgment: 29 June 2012

_{JUDGMENT OF KEANE J}

This judgment was delivered by on 29 June 2012 at 12.30pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Date:

Solicitors:

Loo & Koo, P.O. Box 99687, Newmarket, Auckland

Copy to:

P R Prescott, 1/14A Target Road, Totaravale, Auckland; [e-mail]

PETER RICHARD PRESCOTT V GRAHAM BRUCE ROBERTS HC AK CIV 2012-404-001128 [29 June

2012]

[1] In mid 2008 Turners Car Auctions deregistered a 1996 Toyota Levin car, of which it was then the registered owner, and sold it for parts, realising $1,080; and did so as Peter Prescott, an automotive engineer, contends, knowing that he had carried out work on the car in mid 2006 for which he was still owed $2,119.64.

[2] Turners sold the car for parts, Mr Prescott contends, knowing that he retained a security interest in the car and title to particular parts he had installed, an interest he had twice registered under the Personal Property Securities Act 1999. Turners did so, moreover, he contends, in breach of a contract he and its chief executive, Graham Roberts, had entered into by telephone not long before, under which Turners undertook to pay him $1,000 to relinquish his interest.

[3] Mr Prescott now seeks summary judgment, alleging that Mr Roberts and Turners are not merely in breach of that contract, but are also liable for conspiracy, theft, receiving, fraud, trespass to and conversion of chattels, and negligence. They have intentionally inflicted on him, he contends, emotional distress. He first claimed a sum in excess of $117M. He now claims $385,000.

Issues arising

[4] Mr Prescott rests his claim to immediate summary judgment on a second contract he contends came into being on a biblical principle. On 16 August 2010 he gave Mr Roberts and Turners 30 days within which to dispute his claim and their liability to him for damages to a biblical measure. By not responding within the period of grace he allowed, they are deemed to have agreed to both, or are estopped by silence from denying what he is entitled to.

[5] Mr Roberts and Turners deny that, when Turners took title to the car, then still formally subject to Mr Prescott's registered security interest, he had any registerable interest. Any possessory lien he possessed for the repair, they say, had ceased when he returned the car to its then owner, Ms Aston. Any non-possessory lien resting on his invoice to her, in which he retained title to the parts until paid, they say, is not properly in evidence and was extinguished by Western Bay Finance

Limited, a prior security holder, exercising its power of sale before Turners ever attained title. They deny any contract under which Mr Prescott was to be paid $1,000 before the car was disposed of.

[6] These issues must be set against a sequence of events, which I derive partly from the affidavits filed and partly from what Mr Prescott and defence counsel told me. The narrative in the papers is less than complete.

Sequence of events

[7] In early 2006, or perhaps earlier still, Mr Prescott does not now recall, he saw the Toyota car, then abandoned on Upper Harbour Highway, Auckland. It had been stickered by the Waitakere City Council and was to be towed away for sale within a few days.

[8] It was, according to Mr Prescott, then in a very poor state and worth no more than $100. It had suffered rear and frontal accident damage, a broken windscreen, dents to every panel, including the roof, and it had ripped front seats. It was full of rubbish and had been deregistered.

[9] To check whether there was any security interest registered against the car, Mr Prescott texted the registration number to Text B 4 U BUY. This check revealed no registered security interest disclosed on the Personal Properties Securities Register, but, as Mr Prescott accepts, that was incorrect. At that date there was a security interest registered against the car by Western Bay Finance Limited.

[10] Assuming, however, that the car was not subject to any security interest, Mr Prescott tracked down the registered owner through Motochek. The owner was in prison and Mr Prescott dealt instead with his mother. He purchased the car for $100, repaired it, and on a date he cannot now recall sold it to a client and friend, Jacky Aston, for $5,000. He agreed to permit her to pay him by instalments without interest.

[11] Towards mid 2006 the car was broken into and the stereo stolen. Ms Aston returned it to Mr Preston for repair. He installed a new stereo and car alarm. He also serviced the car and replaced the cam belt and brake pads. He added the bill,

$2,119.64, to what Ms Aston then still owed him on the purchase, $4,000. Her total debt became $6,199.64.

[12] Then, on a date Mr Prescott also cannot now identify, Western Bay Finance stepped in. It took possession of the car from Ms Aston, relying on its security interest. On 6 October 2006, in order to protect his own position, Mr Prescott registered electronically with the Personal Properties Securities Register his bill to Ms Aston for the recent repair, asserting it to be a registerable security interest.

[13] On 31 October 2006 Turners, as agent for Western Bay Finance, sold the car at auction to Almac Holdings Limited, a motor vehicle dealer, for $2,950. Turners passed the proceeds of sale to the receiver of Western Bay Finance. Almac, in turn, sold the car on the open market. Complicating these sales, as it turned out, however, was Mr Prescott's outstanding security interest.

[14] Turners then contacted Mr Prescott, who explained to them the basis for his registerable interest and, when challenged and asked to release it, stood by it. The ultimate purchaser of the car returned it to Almac, and Turners in turn took it back and refunded Almac the purchase price. (It considered itself obliged to do so, apparently, as a registered motor vehicle trader; that Western Bay Finance was then in receivership may also have been complicating.)

[15] On 12 October 2007 Turners' solicitors wrote to Mr Prescott requiring him to release his security interest within 15 days. They claimed that at the date Western Bay Finance sold the car to Almac, 6 October 2006, any possessory lien he had ever had was well extinguished and, in any event, Western Bay Finance's sale extinguished any registerable security interest he then retained.

[16] On 23 October 2007 Mr Prescott replied. He said that there was a Court hearing impending between himself and Western Bay Finance and that at an earlier hearing the Court had agreed with him that Western Bay Finance had been unjustly

enriched by his work. He contended that he was still owed $4,000 but was prepared to settle with Turners or Western Bay Finance for $1,000. Otherwise he intended to stand by his security interest.

[17] On 26 November 2009 Turners' solicitors lodged a change demand under the Personal Property Securities Act 2009, the effect of which was that Mr Prescott had within a prescribed number of days to demonstrate to the Registrar that he had a valid security interest. He did not do so and on 18 December 2007 the Registrar deregistered his security interest.

[18] On 19 December 2007, however, Mr Prescott lodged an identical security interest. On 23 January 2008 Turners' solicitors again wrote to him, stating that this further security interest could not be valid. The car was by then owned and registered to Turners. They gave notice that if he did not deregister his security interest within three days, they were to apply to the Court for an order for its removal.

[19] On 29 January 2008 Mr Prescott, in a letter to Turners' solicitors, stated that Turners was fully aware of the basis for his claimed security interest. It had a copy of his invoice setting out the parts to which he retained title until they were paid for. Turners had purchased the car, he said, knowing this. Turners had said indeed that he could remove the stereo from the car. Why then was Turners making demand?

[20] Mr Prescott again spoke of his offer to relinquish his security interest for

$1,000; the cost of the parts and the time that he would take to remove them. Turners' solicitors once again invoked the change demand procedure. Again Mr Prescott took no steps and the second security interest was discharged on 9 April

2008.

[21] On 22 April 2008 Mr Prescott wrote to Mr Roberts, and explained that he would accept $1,000 for the parts invoiced. He was prepared to write off the balance. Turners' legal costs, he said, must have exceeded $1,000. In that letter Mr Prescott accepted that his registered security interest might still lapse. But, he said, he was still able to lay a complaint with the police and, if Turners sold the car, he could

always approach the new owner and contend that Turners had enriched itself by sale of stolen property.

[22] As a result, Mr Prescott contends, Mr Roberts telephoned him and they entered into the agreement that founds Mr Prescott's claim in contract. They agreed that Turners would pay him $1,000 for his car, in exchange for his undertaking not to resist Turners' challenge to his second registered security and not to register any further security after that security lapsed. Turners would then have clear title and be able to complete sale.

[23] Mr Roberts denies that he ever promised Mr Prescott $1,000. He does not deny explicitly that he telephoned Mr Prescott as a result of receiving the 22 April letter. Nor does he deny explicitly that Mr Prescott put to him that he would accept

$1,000 in exchange for relinquishing his interest. I asked defence counsel to check with Mr Roberts but he proved to be overseas. That is one gap in the evidence.

[24] Be that as it may, Mr Prescott says that, a week after this telephone conversation, he telephoned Turners and the manager handling the matter said that they were having a meeting that day and he believed that they were going to pay Mr Prescott out. Assuming then that his payment was imminent, Mr Prescott took no step to resist the second security lapsing. He did not register any fresh interest.

[25] On a date not in evidence Turners deregistered the car and sold it for parts, obtaining a sum in the vicinity of $1,100. Whether that was before or after the 22

April letter and any conversation between Mr Prescott and Mr Roberts, again is a question unable to be answered on the evidence. The most that can be said is that on

27 July 2008, having discovered by a Motochek that the car had been deregistered, Mr Prescott wrote to Mr Roberts complaining that he had been taken advantage of.

[26] Nothing then appears to have happened until 10 July 2010, when Mr Prescott delivered to Turners by courier post a document he titled 'Commercial Affidavit, Affidavit of Notice, Claim, Declaration and Demand, Fair Notice and Warning of Commercial Grace'.

[27] In that document Mr Prescott first set out his claim in contract, and in theft, and, more widely. He then set out what he described the 'morally just' agreement that Mr Roberts and Turners had then to agree to, as a matter of biblical principle, to right the wrong he had suffered. He was entitled, he claimed, to recompense within 30 days, and according to his own measure, which also rested wholly or partly on biblical principle. That principle, as he described it, was that 'damages should be calculated using the scriptures that says that if you slaughter my cow you give me your cow plus three more'.

[28] Turners did not reply to his notice within 30 days. It replied on 20 September

2010, stating succinctly 'please be informed that Turners Auctions categorically denies all claims and allegations made by you in this matter'. That letter, Mr Prescott contends, is without effect because it was outside the period of grace he had allowed.

[29] Mr Prescott rests his claim for summary judgment on the 2010 agreement he contends resulted from Turners' deemed acceptance of the propositions in his notice. In the first instance he claimed summary judgment for $117M. He now seeks

$385,000.

Summary judgment principles

[30] HCR 12.2(1) enables this Court to give judgment against a defendant 'if the plaintiff satisfies the Court that the 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'.

[31] In the early foundational case, Pemberton v Chappell,1 Somers J set out the central principles on which the summary judgment procedure rests beginning with its purpose. He said this2:

The general object of the rules about summary judgments is clear. It is to enable a plaintiff to obtain judgment where there is really no defence to the claim made and so put an end to the spectacle of a worthless defence being raised and pursued for the purposes of delay.

[32] A defendant faced with a claim for summary judgment, Somers J continued to say, was obliged to file an affidavit 'raising an issue of fact or law and give reasonable particulars of the matters which he claims ought to be put in issue'.3 But once that had happened, as it has in this case, Somers J said, the plaintiff was obliged to satisfy the Court that the defendant had no defence.

[33] As to that, Somers J said, the plaintiff had to persuade the Court that the defence raised no 'real question to be tried'; and do so to the point where the Court could be 'confident, sure, convinced ... persuaded to the point of belief ... left without any real doubt or uncertainty.' And, as to that, Somers J said this4:

Where the defence raises questions of fact upon which the outcome of the case may turn it will not often be right to enter summary judgment. There may however be cases in which the Court can be confident — that is to say, satisfied — that the defendant's statements as to matters of fact are baseless.

[34] In this instance Mr Roberts and Turners have filed a statement of defence, and Mr Roberts an affidavit, in which they advance positive defences. Mr Prescott comes, therefore, squarely under the persuasive onus that Somers J described. He must discharge it by orthodox legal analysis on evidence admissible on conventional principles. He cannot rely on his 2010 notice or their response. The status he ascribes that notice, and the effect he attributes to it, are unknown to New Zealand law.

Security interest issue

[35] Mr Prescott's claim to a security interest in the car, at the date when Turners became the registered owner, and his claim that this interest still subsisted when Turners disposed of the car for parts, involves a number of issues, the first of which is whether, when he registered his security interest, he had a security interest that was registerable.

[36] Section 17(1) of the Personal Property Securities Act 1999 defines a 'security interest' in the most general sense:

an interest in personal property created or provided for by a transaction that in substance secures payment or performance of an obligation, without regard to—

(i) The form of the transaction; and

(ii) The identity of the person who has title to the collateral; and

[37] A lien is not an interest capable of being registered under the Act.5 A lien is only recognised as having force under the Act as an interest arising from continuing possession of the goods to which the debt attaches.6 And that results in two difficulties for Mr Prescott.

[38] The interest Mr Prescott claimed on registration rested on the debt that Ms Aston may then still have owed him for the repair to the car, $2,119.64. But his interest, to the extent that it was only a possessory lien for his work and the parts, did not qualify for registration as a registerable interest. Nor did he retain any protection under the Act at all. The lien, if it was merely possessory, would have ceased immediately he returned the car to Ms Aston.

[39] To answer that Mr Prescott relies on the invoice that he says he issued to Ms

Aston and which he produced for the first time at the hearing. It is dated 17 June

2006. It itemises the work he did. It is in a standard form and contains at its base the words 'all parts, materials and lubricants remain the property of ONline Car Care until paid for'.

[40] Mr Prescott told me that he signed the original as the repairer and that he had Ms Aston do so as well. But he has lost his copy and Ms Aston, who now lives out of Auckland, has all her papers in boxes. It would be unreasonable to ask her to go through them. There has then to be an issue still be resolved on evidence whether Ms Aston did sign any invoice, the invoice Mr Prescott produced, or any other; and then a further issue of law as to what status that gave the invoice, if any.

[41] The invoice resulted from a contract between Mr Prescott and Ms Aston for work and materials, to which on the face of it the Consumer Guarantees Act 1993

applied. To what extent the invoice then complied with that Act and Mr Prescott discharged any duty7 to Ms Aston to explain to her what the effect of the clause was before she subscribed to it, cannot be resolved on the papers as they are.

[42] Also, though on the face of his letter, dated 22 April 2008, Mr Prescott had sent a copy of his invoice to Turners, and in that letter Mr Prescott claimed that he still had title to the parts, he did not produce a copy of his invoice to the Registrar to assert his registerable interest, on the two occasions the Registrar had to consider whether to set his registered interest aside. There too his failure does not assist him.

[43] Finally, even assuming that at the date Western Bay Finance sold the car through Turners, exercising its power of sale, Mr Prescott did have a validly registered interest, Western Bay Finance then enjoyed priority over Mr Prescott, because its security interest had been perfected earlier than his.8 The effect of the power of sale being exercised was to extinguish Mr Prescott's security interest.9

[44] Under that Act Mr Prescott was left only with Ms Aston's personal debt. He retained no claim under a subsisting security interest attaching to the car, or to any part of it, against those who purchased from Western Bay Finance, Almac in the first instance and ultimately Turners.

[45] At the very least, therefore, for these several reasons, Mr Prescott's claim, relying on a registerable interest, has to be vulnerable to challenge. There is then the issue as to the status of the agreement, which Mr Prescott asserts and there is an immediate contrast between what he asserts was agreed and what then was capable of being agreed.

Agreement issue

[46] Mr Prescott contends that, in exchange for $1,000, he agreed not to challenge

Turners's second registered interest and, further, not to register a third interest once the second was set aside, thus freeing Turners to dispose of the car.

7 _{Consumer Guarantees Act 1993, s 5(1)(c)(ii).}

8 Personal Property Securities Act 1999, s 66(b)(i).

[47] The fact is, however, that on 22 April 2008 the second interest had already been discharged. That had happened on 9 April. And that is at least one reason to question whether Mr Roberts, who denies offering Mr Prescott anything on behalf of Turners, would ever have agreed to pay him $1,000.

[48] This may not be absolutely fatal to Mr Prescott's claim. In his letter, dated 22

April 2008 to Mr Roberts, he appears to assume that his second charge was still subsisting. But in his letter to Mr Roberts, dated 27 July 2008, he complained that he had not renewed his charge in good faith, that allowed Turners to deregister the car and dispose of it for parts.

[49] Mr Roberts may then still be able to assert that his decision to desist from registering a third security interest was a sufficient basis for the contract he asserts, even if at the time he believed still that the second security interest had still to be set aside. However, at the very least, this is an unresolved issue of fact remaining that can only be resolved at trial.

Damages

[50] The final issue to which Mr Prescott's application for summary judgment gives rise is his claim for damages. His loss in the most complete sense as a result of the repossession of the car Western Bay Finance and its sale by Turners, to the extent that he has identified it, was slightly in excess of $6,000, yet he claims $385,000.

[51] Mr Prescott's claim for the breach of contract alone is $45,000 and his claim increases with each of the nine further causes of action he advances. On what principle he can begin to assert that even the first of those losses was of the order it was has to be open to question. And the fact that he has several different causes of action seeking damages as to each, does not give him any greater right. They are not truly alternative. Essentially he is complaining about the same asserted wrong in several different and inventive ways.

Conclusions

[52] Mr Prescott's claim against Mr Roberts and Turners, I conclude, does not qualify for a grant of summary judgment. Turners clearly have a defence, indeed a series of defences, to Mr Prescott's claim that are unable to be resolved on his application, on the papers as they are, and are worthy for trial. I decline his application.

[53] It is clear to me also that the only reason why Mr Prescott's claim is in this Court is as a result of his highly inflated claim for damages. Any damages to which he might conceivably be entitled lie at the lower end of the jurisdiction of the District Court. That is the Court in which his claim should be resolved. It should not remain in this Court.

[54] As I intimated to Mr Prescott at the hearing, having now reached this conclusion, I make an order of my own motion under s 46(2) of the District Courts Act 1947 transferring the proceeding to the District Court; and I do so, I wish to be clear, on the basis that there is no important question of law or fact involved in this case that requires it to remain in this Court.

[55] Turners is entitled to an award of costs on the present application, as I should have thought at scale 2B. Though I am now transferring the case to the District Court, there will be an order accordingly.10 Any issues as to the calculation are to be resolved by the Registrar.

[56] Finally, I record that my decisions to decline summary judgment, and to transfer the proceeding to the District Court, and to award costs, remain susceptible

_{of appeal to the Court of Appeal.}11

_{P.J. Keane J}

10 _{District Courts Act 1947, s 48(1).}

11 Section 46(2)