Chapman v Caughley [2012] NZHC 2353 (13 September 2012)

Last Updated: 9 October 2012

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2012-485-857 [2012] NZHC 2353

BETWEEN DAVID JOHN CHAPMAN AND JANETTE YVONNE OKKERSE AS TRUSTEES FOR THE JANETTE OKKERSE FAMILY TRUST Plaintiffs

AND RICHARD HUDSON CAUGHLEY AND RICHARD JAMES BURRELL AND KB

2012 LTD AS TRUSTEES FOR THE RB (NO.1) INVESTMENT TRUST Defendants

Hearing: 22 August 2012

Counsel: D Hollings QC for Plaintiffs

H Cull QC for Defendants

Judgment: 13 September 2012 at 3.30 pm

_{RESERVED JUDGMENT OF ASSOCIATE JUDGE SARGISSON}

This judgment was delivered by me on 13 September 2012 at 3.30 pm pursuant to

Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date ..........................

Solicitors:

Rachael Dewar Law, L9 Petherick Tower, 38-42 Waring Taylor Street, Wellington

Chris Rickit, 39 Waring Taylor Street, Wellington

CHAPMAN AND OKKERSE AS TRUSTEES FOR THE JANETTE OKKERSE FAMILY TRUST V CAUGHLEY AND BURRELL AND KB 2012 LTD AS TRUSTEES FOR THE RB (NO.1) INVESTMENT TRUST HC WN CIV-2012-485-857 [13 September 2012]

[1] The plaintiffs are David Chapman and Janette Okkerse as trustees of the Janette Okkerse Family Trust, which I refer to as the Okkerse Trust. They apply for summary judgement on the sole cause of action in their statement of claim for

$1,375,527.50. This is the amount that they say the defendants owe to them by way of outstanding principal and interest on a number of loans. They also seek costs.

[2] The defendants are Richard Caughley and Richard Burrell as trustees for the RB (No. 1) Investment Trust, which I refer to as the RB Trust. They oppose an order for summary judgment. They say that contrary to the plaintiffs’ contention, they have genuine defences to the claim that ought to be tested at trial and not dealt with summarily.

[3] The plaintiffs’ application is made under High Court Rule 12.2. Relevantly,

it states:

(1) The court may 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.

[4] The issue I am required to determine is whether the plaintiffs have demonstrated that they have a prima facie case to which the defendants do not have a reasonably arguable defence and whether therefore they are indeed entitled to summary judgment on their claim.

Relevant Legal Principles

[5] The principles applying to a plaintiff's summary judgment application are well established. They were summarised by the Court of Appeal in Jowada Holdings Ltd v Cullen Investments Ltd:1

[28] In order to obtain summary judgment under Rule 136 of the High Court Rules a plaintiff must satisfy the Court that the defendant has no defence to its claim. In essence, the Court must be persuaded that on the material before the Court the plaintiff has established the necessary facts and legal basis for its claim and that there is no reasonably arguable defence available to the defendant. Once the plaintiff has established a prima facie case, if the defence raises

1 CA 248/02, 5 June 2003.

questions of fact, on which the Court's decision may turn, summary judgment will usually be inappropriate. That is particularly so if resolution of such matters depends on the assessment by the Court of credibility or reliability of witnesses. On the other hand, where despite the differences on certain factual matters the lack of a tenable defence is plain on the material before the Court, to the extent that the Court is sure on the point, summary judgment will in general be entered. That will be the case even if legal arguments must be ruled on to reach the decision. Once the Court has been satisfied there is no defence Rule 136 confers a discretion to refuse summary judgment.

[Emphasis added]

[6] It is common ground that the onus rests with the plaintiff to show there is no defence, but that the circumstances may cause the evidentiary onus to shift to the defendant. Eichelbaum J discussed this issue in Auckett v Falvey, where the plaintiff sought specific performance of a contract for the sale of land and the defendants pleaded that they were entitled to rectification.2 His Honour said:

On a summary judgment application, the onus is on the plaintiff to show that there is no defence. On the present facts, the plaintiffs are able to pass an evidential onus to the defendants by exhibiting the contract which on its face, entitles them to the remedy they now seek. The defendants are then in a position of having to demonstrate a tenable defence. However, the overall position concerning onus on the application is that at the end of the day the question is whether the plaintiffs have satisfied the court as to the absence of a defence.

Nature of the dispute

[7] The summary judgment application arises, essentially, within the context of a relationship breakdown. It concerns a dispute about certain loans that the Okkerse Trust made to the RB Trust and Mr Burrell over the period 2005 to 2008. The dispute rests on what amounts have been repaid, what amounts remain outstanding and whether there is an entitlement to interest that has not been met.

[8] It is useful at the outset to breakdown the various sums that form the basis of the plaintiffs’ claim for $1,375,527.50. At [28] of their statement of claim, the

_{plaintiffs claim that the following sums are outstanding:}

2 Auckett v Falvey, HC Wellington CP296/86, 20 August 1986 at 2.

a) $42,616.80, being the outstanding interest of a $460,000 loan;

b) a $650,000 loan, plus interest of $299,801.373;

c) a $20,000.00 loan;

d) a $13,500 loan;

5. $272,000 being the outstanding balance of a $300,000 loan, plus interest of $77,609.254.
   

[9] Before turning to the loans that lie at the heart of this proceeding, it is necessary to briefly discuss Mr Burrell and Ms Okkerse’s relationship and an agreement they made.

Separation Agreement

[10] Mr Burrell and Ms Okkerse were married in 1980. After 23 years of marriage, they separated in April 2003. In April 2005 they reconciled and resumed their relationship as husband and wife for a further four years. In November 2009 they separated for a second time.

[11] On 17 May 2005, though Mr Burrell and Ms Okkerse had just brought their separation to an end, they signed a Separation, Financial Support and Property Agreement. The ostensible purposes of the Separation Agreement were to settle their differences over relationship property, provide for final division of that property and record an agreement concerning property that they held in their respective family trusts, the JY Burrell Family Trust and the RJ Burrell Family Trust. The Separation Agreement also recorded their agreement for financial support for Ms Okkerse and the two daughters of the marriage.

[12] The Separation Agreement (as its title suggests) was drafted with a view to an ongoing separation. However, counsel for both parties advise that the couple

3 _{Interest calculated at 7% per annum from 1 November 2005 to 1 June 2012}

4 Interest calculated at 9.2% per annum from 30 July 2008 to 1 June 2012 and taking into account the reduction in interest owed following partial repayments of the principal sum and interest paid.

proceeded with it as a means of resolving issues as they embarked on their second relationship.

[13] Certain terms of the Separation Agreement concern relationship property. Among other things those terms provide that Mr Burrell will retain his shares in the Burrell/Wilkinson Group of Companies as his separate property, but that he will pay Ms Okkerse $606,683 to compensate her for half of the value of the shares. The terms also provide that:

a) Mr Burrell is to make the payment of the $606,683 sum on 30

November 2005 or on the realisation of the RJ & JY Burrell Family Trusts’ investment in Tasman Promotions Limited “whichever shall happen first”; and

b) In the event of default in part or in whole by the due date, interest shall accrue on the outstanding sum at the penalty rate of 12.5% per annum from the earliest date the sum becomes payable until payment in full.

The 2005 loans from the Janette Okkerse Family Trust to the RB Trust

[14] Mr Burrell is a property developer. Within weeks after he and Ms Okkerse had signed the Separation Agreement, he needed a source of funds to assist one of their daughters to buy a house. His own funds were fully committed to his various enterprises. Before much longer he needed further funds. The result was that the plaintiffs as trustees of the Okkerse Trust agreed to make certain loans to the defendants as trustees for the RB Trust. These parties entered into two loan agreements in 2005 which they documented in formal deeds, pursuant to which the following loans were made:

a) A loan of $460,000.00. The relevant deed, dated 21 June 2005, provides that the loan is for a term defined as the period from 1 June

2005 until either the completion of the sale of the RB Trust’s property at 4 Murrayfield Drive, Thorndon or 1 December 2005, whichever is the earlier; and

b) A second loan of $650,000.00. The relevant deed, dated 1 November

2005, states that the loan is for a term defined as the period from the date of the deed to 1 July 2006.

[15] Each deed provides that the relevant loan is subject to interest at 7% per annum and that the interest is to “accrue on a daily basis on the outstanding principal... from the commencement date” and to be “paid, together with the principal sum at the expiry of the term”. Unlike the Separation Agreement, which provides expressly for interest in the event that repayment of principal is late, neither deed contains any express agreement to pay interest beyond the term in such event.

The 2007 and 2008 loans from the Okkerse Trust to Mr Burrell personally and the

RB Trust

[16] In 2007 and 2008 Mr Burrell again turned to Ms Okkerse for further funding:

a) On 21 November 2007, the Okkerse Trust loaned $20,000 to Mr

Burrell’s personal bank account.

b) On 29 January 2008, the Okkerse Trust loaned $13,500 for Mr Burrell to purchase a car for one of the couple’s daughters. The money was advanced directly to the vendor.

c) On 30 July 2008, the Okkerse Trust loaned $300,000.00 to the RB Trust.

[17] There were no formal loan documents for the 2007 and 2008 loans but on 30

July 2008 Mr Burrell provided Ms Okkerse with a letter under his signature which states:

RE: Loan

This letter serves a confirmation that the JY Okkerse Trust has lent the RB (No. 1) Trust $300,000 plus interest of 9.20% for a period of

12 months from 30 July 2008.

Plus this letter serves as confirmation that there are still outstanding debts from the RB (No. 1) Trust to the JY Okkerse Trust of:

- $13,500 on 29 January 2007

- $20,000 on 21 January 2007

[18] Despite the informal nature of the letter, the trustees of the RB Trust do not dispute that the monies loaned are trust debts. There is also no dispute that the smaller loans do not attract interest.

[19] Having outlined the relevant loans that the Okkerse Trust made to the RB Trust and Mr Burrell, I now come to the amounts that have been repaid.

RB Trust’s 2007 $1,167,812.18 repayment contribution

[20] On 5 February 2007 the RB Trust paid the Okkerse Trust $1,180,195.18 as a contribution to assist with the purchase of an apartment known as the Chaffers Apartment 402. The plaintiffs claim and the defendants accept that the Okkerse Trust refunded $12,383.00 from the settlement of the Chaffers Apartment and that the final contribution was in fact $1,167,812.18.

[21] The parties’ pleadings indicate that it is not in dispute that the $1,167,812.18

contribution cleared:

a) The $606,683 debt that arose under the Separation Agreement; and

2. A substantial part of the overall debt that the RB Trust had incurred under the 2005 deeds of 21 June and 1 November 2005.
   

[22] There is however, no evidence that comprises a contemporaneous record of precisely what the amounts of the Separation Agreement debt and the debts incurred under the 2005 deeds were at the time of the $1,167,812.18 contribution. Nor is there a contemporaneous record of precisely which of the debts incurred under the Separation Agreement and the 2005 deeds were actually retired or partially retired by the $1,167,812.18 contribution. There is some dispute on those issues. The parties’ pleadings reflect a degree of accord that part of the contribution was applied to clear Mr Burrell’s personal debt under the Separation Agreement and the associated interest, but that is where the apparent agreement ends.

Parties’ positions regarding the $1,167,812.18 contribution

[23] The plaintiffs claim that at the time of the $1,167,812.18 contribution in February 2007, the Okkerse Trust was owed a significant sum by the RB Trust. At [20] of their statement of claim, they say that the $1,167,812.18 contribution retired two debts plus interest as follows:

The payment on or about 5 July 2007 retired the following debts:

(a) $606,683, being the amount owing in respect of the

Separation Agreement;

(b) $89,756.64, being interest accrued on the sum owed pursuant to the Separation Agreement;

(c) $460,000, being the amount advanced from the Janette Okkerse Family Trust to the RB (No.1) Investment Trust pursuant to the deed dated 21 June 2005;

(d) $11,373.34, being partial repayment of the $53,190.18 interest owed in respect of the sum advanced by the deed dated 21 June 2005.

[24] Somewhat surprisingly, the plaintiffs have not produced any of the Okkerse Trust’s financial statements as evidence. In the absence of those statements, which would ordinarily be produced in an application of this nature, the plaintiffs contend that their position is supported by two key documents.

[25] The first document is a statement compiled on 18 March 2008 by Morrison Kent, the solicitors who appear to have acted for the parties as well as Mr Burrell and Ms Okkerse personally. The statement outlines Morrison Kent’s understanding of amounts owed to the Okkerse Trust by the RB Trust and Mr Burrell. The amounts relate to the Okkerse Trust’s loans, but include interest that had accumulated. The statement also outlines Morrison Kent’s understanding of how the RB Trust’s $1,167,812.18 contribution was applied to reduce the loans. Their understanding is that the contribution cleared the balance of Mr Burrell’s debt under the Separation Agreement and reduced (but not cleared) the RB Trust’s debt in respect of the loan of $650,000. Relevantly, the statement provides:

Share of business

Amount owed – 05.02.07 _$696,439.64

_{Less credit for YJ Burrell Family Trust}

_{loan made repayment on 15.11.05} $50,000.00

Paid 05.02.07 – apartment chaffers dock _$646,439.64

_{Reduction of mortgage}

Amount owed – 05.02.07

$708,879.00

Paid – 05.02.07 – apartment chaffers dock $521,372.54

_{Juli a’ s H ouse}

Amount owed – 26.03.07 $518,344.00

Balance required to complete matters as at 26.03.07 $705,850.48

[26] The second document is a report compiled by Pricewaterhouse Coopers and dated 17 May 2011 in which the author, Mr Archer, responds to Ms Okkerse’s request for calculation of the sums owing to the plaintiffs. Ms Okkerse deposes that Mr Archer was the accountant for her and Mr Burrell personally, as well as the Okkerse Trust and the RB Trust at all relevant times. Mr Archer’s report refers to the Morrison Kent statement and breaks down each “amount owed” to demonstrate the interest component of each figure. He calculates the total amount of interest to be $206,979. That figure is made up of:

a) $89,756 owing on the $606,683 loan;

b) $58,879 owing on the $650,000 loan; and c) $58,344 owing on the $460,000 loan.

[27] The amounts of interest appear as handwritten notes on the Morrison Kent statement as it was produced as evidence to the Court. Relevantly, Mr Archer’s report states:

The amount of $206,980 formed part of a settlement statement issued by Morrison Kent dated 18 March 2008 (their reference OKK650/1) signed by Matthew Whimp (attached as Appendix 1). The interest you refer to has been broken out on the settlement statement by way of handwritten calculations by myself.

This is the only document I have in regard to this amount. No detailed workings for the calculation of those amounts were ever provided to me despite repeated requests.

...

The calculations behind the amount of $206,980 would need to be sourced from Morrison Kent.

[28] On the other hand, the defendants in their statement of defence claim that the

$1,167,195.18 sum retired three debts, as follows:

a) $504,683 which they allege was the balance of the principal that Mr Burrell owed under the Separation Agreement. (They plead that he made a number of payments in reduction of the principal over the period 16 March 2006 to 18 December 2006 which reduced the total principal owing to $504, 683);

b) The $460,000 loan of 1 June 2005; and

c) $203,129.18 being part of the principal owing under the $650,000 loan of 1 November 2005, leaving outstanding principal of

$446,870.82.5

[29] The defendants’ position assumes no interest was payable on any of these debts. They rely essentially on Mr Burrell’s assertion that “although some of the loans were documented and referred to interest rates” he and Ms Okkerse agreed that

_{“whilst we remained living together, and whilst I met all day to day living expenses}

5 I note that Morrison Kent’s statement suggests $50,000 was paid on 15 November 2005 by the JY Family Trust, which served as a credit to reduce the amount owing to the Okkerse Trust. However, the schedule to the statement of defence does not make any reference to this payment.

no interest would be payable unless we again separated”. They separated once again in November 2009 and Mr Burrell claims that any interest accrued from that date. Relevantly, Mr Burrell makes no claim that the alleged agreement was made with the knowledge or concurrence of either his or Ms Okkerse’s other trustee.

Further Repayments in 2009 and 2010

[30] The plaintiffs acknowledge that the defendants made further repayments to the Okkerse Trust several years after the settlement of Chaffers Apartment which should be taken into account. The payments are:

a) $8,000.00 made on 28 August 2009; and b) $20,000.00 made on 17 March 2010.

[31] The plaintiffs say that these payments reduced the July 2008 loan of

$300,000 leaving principal of $272,000. In their statement of defence, the defendants essentially agree, though they plead that $655.98 was paid to clear interest that they say started to accrue in November 2009, when Mr Burrell and Ms Okkerse separated once again.

[32] The defendants made further interest payments, totalling $22,379.88, between 30 November 2009 and 20 March 2011. Mr Burrell contends that the same arrangement as to the waiving of interest applied to the $300,000 loan as with the earlier loans. Therefore, he claims that no interest accrued for the period between 30

July 2008 and 9 November 2009. Instead, interest commenced in November 2009, when Mr Burrell and Ms Okkerse separated for the second time.

[33] I pause to note that the plaintiffs do not acknowledge that there has been repayment of the $20,000 loan of 21 November 2007. Their letter of demand from

22 December 2011 failed to specify that loan. In their statement of claim they state that “this loan should have been included, given that it is acknowledged as debt owed by the RB (No.1) Investment Trust to the Janette Okkerse Family Trust.”

Defendants’ set-offs and other defences

[34] Coupled with their denial of liability for interest for the duration of Mr

Burrell and Ms Okkerse’s reconciliation, the defendants say that other than the

$1,167,812.18 contribution in February 2005, there had been numerous payments that have cleared or all but cleared the loans made by the Okkerse Trust to the RB Trust. They claim that prior to February 2005, 12 repayments were made, totalling

$102,000. They claim that after February 2005, 55 repayments were made, totalling

$ 712,224.35.

[35] The defendants also claim to have a further or alternative defence. It is that Ms Okkerse and the Okkerse Trust received financial benefits from Mr Burrell and the RB Trust that should be taken into account as set-offs to any outstanding balance. They claim that the value of those financial benefits exceeds any outstanding amount that the RB Trust may owe the Okkerse Trust. These are the five set-offs in their statement of defence:

a) $125,000.00, being half the purchase price of the shares in a company named Tawhiti Road Limited and $375,000.00, being half the current value of the Tawhiti Road Limited shares;

b) $216,247.74, being a payment that Mr Burrell made on Ms Okkerse’ behalf in 2008 to purchase a business named Ipoh New Zealand Limited;

c) $6,493.61, being the amount that Mr Burrell paid Ms Okkerse’s

lawyers’ and accounting fees and claims; and

d) $48,733.00, being half the costs of their daughter’s tertiary education, which Mr Burrell and Ms Okkerse agreed to share and which Mr Burrell paid in its entirety.

[36] In Mr Burrell’s affidavit in opposition of the plaintiffs’ application for summary judgement, he claims two “relationship assets” as set-offs. Neither appear

in the defendants’ statement of defence or in written submissions. First he claims

$50,000 as a set-off in respect of holidays for himself and Ms Okkerse, which he paid for. Secondly, he claims $100,000 as a set-off for artwork owned by RB Trust which is in Ms Okkerse’s possession.

Discussion

[37] Pivotal to summary judgment is the requirement that the plaintiffs show they have a prima facie entitlement on the material before the Court to the various claims for unpaid principal and interest. It is also pivotal that the plaintiffs have discharged the overarching onus of showing that any defence the defendants rely on in answer to the claim is not a tenable defence.

Have the plaintiffs made out their claim on a prima facie basis?

[38] I begin with the issue whether, on the material before the court, the plaintiffs have established the necessary facts and legal basis for their claim on a prima facie basis for various sums of outstanding principal and interest totalling $1,375,527.50.

[39] Putting aside momentarily the grounds of opposition, I have come to the conclusion that the plaintiffs have not gone far enough to establish the legal basis for some significant aspects of their overall claim on the evidence. There are several reasons.

[40] First, the 2005 deeds and the July 2008 letter do not set out an express agreement to an entitlement to interest for late payment. The approach that the court took in Stellin is apposite.6 It is a case in which interest was payable as a matter of agreement up to a certain date but, in the absence of an express agreement to pay interest thereafter, interest ceased to be payable from that date.7 Whether or not there is a right to interest for late payment in equity or as damages was not argued. I am of the view that the basis of the claim to interest ought to have been clearly

_{addressed in the plaintiffs’ statement of claim and in evidence and submissions. Of}

6 _{Stellin Construction Ltd v Carr [1948] NZLR 587.}

7 Laws of New Zealand Interest (online ed) at [8] footnote 1.

the $1,375,527.50 that the plaintiffs claim, $420,027.22 is interest.8 Most of that is interest on late payment of principal and the entitlement to such has not been established.

[41] I pause briefly to mention Mr Burrell’s assertion that he and Ms Okkerse agreed that interest would be waived “whilst we remained living together, and whilst I met all day to day living expenses... unless we again separated”. It was on this assertion that counsel for the plaintiffs directed the main thrust of her submissions on the question of the plaintiffs’ entitlement to interest for late payment. The plaintiffs argue that Mr Burrell and Ms Okkerse were living together at the time they entered into the Separation Agreement, which provided for interest. In those circumstances, they submit, it is most unlikely that Ms Okkerse would agree to waive interest while they lived together.

[42] I see some force in the plaintiffs’ response. I agree with counsel for the plaintiffs that it would be odd for Ms Okkerse to waive interest while they lived together after having entered an agreement for interest whilst they lived together. I also note that Mr Burrell provides no evidence that the other trustees on both sides were consulted about the waiver.9 On the other hand however, it is odd in the first place that Ms Okkerse and Mr Burrell entered into a Separation Agreement while living together and with a view of remaining together. The parties seem to have approached their financial arrangements with a degree of informality that overlays their written agreements and it appears that they never acted as commercial entities.

I see this as an issue that may benefit from further disclosure and the light that may be shed on it in the context of a trial. However even if this issue were settled, it remains that the plaintiffs have not resolved the fundamental question of their legal entitlement to interest in late payment of the principal sums.

[43] I come to the second reason why the plaintiffs have not established the legal basis for some aspects of their overall claim. In the absence of the Okkerse Trust’s

8 _{The total sum of $42,616.60, $299,801.37 and $77,609.25.}

9 However, that may not be fatal if the other trustees are deemed to have sanctioned the decision. That is because “the act of one trustee done with the sanction and approval of a co-trustee may be regarded as the act of both, though such sanction and approval must be strictly proved” see Lang v Southen HC Christchurch AP15/01, 24 July 2001 (per Panckhurst J) and Kate Davonport “Liability” in Don Breaden Law of Trusts (NZ) (LexisNexis, New Zealand, 2011) at [4.12.2].

financial statements, the plaintiffs’ assessment about both the principal and interest outstanding upon the RB Trust’s $1,167,812 contribution appears to be flawed in a number of ways.

[44] Morrison Kent’s statement from 18 March 2008, upon which the plaintiffs rely, is at odds with plaintiffs’ contentions:

a) The statement allows a $50,000 credit for an earlier payment received from the JY Burrell Family Trust on 15 November 2005. The plaintiffs make no mention of this repayment in their statement of claim or evidence. The plaintiffs appear to rely on the Morrison Kent statement selectively and only as far as it supports their claim. The Court is left to question the accuracy of the Morrison Kent statement and also to question why the plaintiffs did not produce the Okkerse Trust’s financial statements as evidence.

b) There are differences over what loans were retired by the RB Trust’s

$1,167,812 contribution made at the time of settlement of the Chaffer Apartment. The plaintiffs’ statement of claim indicates the $1,167,812 contribution retired the $460,000 loan from the 21 June 2005 deed and left entirety of the $650,000 loan from 1 November 2005 deed (and interest) outstanding. Morrison Kent’s statement, on the other hand, indicates that the $460,000 (and interest) is owing and a large part of the $650,000 debt is retired. This inconsistency has a potential impact on the correct amount of interest outstanding. It raises further questions as to the accuracy of the Morrison Kent statement upon which the plaintiffs place considerable reliance.

[45] In addition, Mr Archer’s report from 17 May 2011, upon which Ms Okkerse and the plaintiffs rely, casts doubt over Morrison Kent’s assessment of interest. That in turn affects the amount that was applied to retire principal. On this evidence, it may be that the RB Trust is entitled to a greater credit for reduction of principal than Ms Okkerse asserts.

[46] Thirdly, the plaintiffs have not established the amount of interest that accrued before late payment under the $460,000 loan from 21 June 2005. That is because the relevant deed provides for interest from 21 June 2005 to either the completion of the sale of 4 Murrayfield Drive, Thorndon or 1 December 2005 whichever is the earlier. The plaintiffs have not disclosed the date that the sale of the Murrayfield Drive property was completed and it is unclear when the interest period under the deed came to an end.

[47] For the above reasons, I am not satisfied that the plaintiffs have demonstrated their entitlement to summary judgment for the overall amount the claim,

$1,375,527.50. The gaps and inconsistencies in the evidence relate to significant aspects of the overall claim. They leave questions as to principal and interest that are so interdependent that I am not “persuaded that on the material before the Court the plaintiff[s have] established the necessary facts and legal basis for [their] claim”

and “established a prima facie case”.10

Would it be safe to grant summary judgement?

[48] I am mindful that even taking into account the three reasons above, and despite the present shortcomings of the plaintiffs’ case, it does appear that they may still be owed a significant sum by the defendants. On my calculations11, the

plaintiffs may be owed approximately $841,273.43.12 I accept (and will discuss

below) that some of the defendants’ defences seem implausible. However I believe that it is unsafe, in the context of an application for summary judgement, to identify any particular sum that is outstanding on any particular loan. Likewise, it is unsafe to identify any particular loan as outstanding.

[49] The plaintiffs invite me to take an inconsistent approach to the evidence. They agree that a robust approach toward the defendants’ evidence is warranted,

10 _{Jowada Holdings Ltd v Cullen Investments Ltd CA 248/02, 5 June 2003 at [28].}

11 The figure may be more or less depending on a number of factors; most significantly whether the plaintiffs can establish entitlement to interest for late payment or the equivalent in damages.

12 I emphasise that, because of the inconsistencies in the plaintiffs’ evidence, this is only an approximate amount. It takes into account: a reduction of the interest for late payment; the $50,000 credit that appears on the Morrison Kent statement; and $125,000 as the Tawhiti Road Limited set-off which the plaintiffs acknowledge.

claiming that the evidence is bare assertion. They criticise the defendants’ evidence as abbreviated and insufficient. However, that is a criticism that may also be levelled against the plaintiffs. Other than producing the documents upon which the loans were made, the plaintiffs have produced very little evidence about ongoing obligations and repayment. The evidence that they did produce clearly lacks precision and contains troubling inconsistencies.

[50] While I accept that some of the defendants’ defences seem implausible (and I will discuss them presently) others cannot easily be dismissed summarily. It is clear that the parties to this proceeding did not interact as two commercial entities. There was a considerable amount of informality in the relevant loans and repayments. That is exacerbated by the fact that neither the Okkerse Trust nor the RB Trust provided their financial statements or financial accounts as evidence.

[51] So while it appears that the plaintiffs are owed a significant amount, against the submissions of counsel for the plaintiffs, I must err on the side of caution. It would be unsafe for me to make any judgement in the plaintiffs’ favour. Further, the plaintiffs may well be entitled to interest for late payment in the form of damages, but that has neither been argued nor proved.

[52] Overall, I believe that this is a case that would benefit greatly from further evidence and a hearing conducted in the context of a trial. Summary judgement does not provide the appropriate context for the Court to search through evidence, effectively with a fine-tooth comb. Yet that is what the Court has been asked to do in this case, in an attempt reconcile various inconsistencies within the plaintiffs’ own evidence. In Westpac Banking Corporation v M M Kembla New Zealand Ltd, the Court of Appeal explained when an application for summary judgement application

will not appropriate:13

[62] Application for summary judgment will be inappropriate where there are disputed issues of material fact or where material facts need to be ascertained by the Court and cannot confidently be concluded from affidavits. It may also be inappropriate where ultimate determination turns on a judgment only able to be properly arrived at after a full hearing of the evidence. Summary judgment is suitable for cases

where abbreviated procedure and affidavit evidence will sufficiently expose the facts and the legal issues.

Conclusion as to the plaintiffs’ proof

[53] For these reasons I am bound to conclude that the plaintiffs have not gone far enough to establish their overall claim on the evidence and that the evidentiary onus does not shift to the defendants. Given the above findings, it is not necessary to review the defendants’ grounds of opposition to any greater extent than I already have. For the sake of completeness however, I make some brief comments on the set-off defences, though my comments are not to be taken as determinative.

Are the grounds of defence tenable?

[54] The only set-offs of any apparent substance at this point are those that relate to the shareholding in Tawhiti Road Limited. They are $125,000.00 for half the purchase price of the shares and $375,000.00 for half the current value of the shares. The plaintiffs acknowledge that this claim relates to the Okkerse Trust and the RB Trust. They agree that the Okkerse Trust holds a 1/6 shareholding for the RB Trust and that the shareholding is to be paid when the property is sold. However, they effectively raise three points concerning the shareholding. First, they argue that Mr Burrell’s evidence as to the value of the shareholding is “vague and entirely unsubstantiated”. Secondly, they contend that the shares may not be sold for up to six years. Thirdly, they contend that defendants owe so much money that the value of the shares does not amount to an available defence as to liability. At best the defence may go to quantum, but the Court can give partial summary judgement on

the issue of liability and not quantum.14

[55] Overall, I agree that the Okkerse Trust holds a 1/6 shareholding for the RB Trust that forms a set-off. However, I cannot determine the appropriate value of the shares on the evidence provided. That is an issue that would benefit from further evidence, most obviously valuation evidence, as well as cross-examination. The

unknown value of this set-off is another reason for refusing summary judgement, particularly as to quantum. Grant v New Zealand Motor Company Ltd is apposite:15

The principle is, we think, clear. The defendant may set-off a cross-claim which so affects the plaintiffs' claim that it would be unjust to allow the plaintiff to have judgment without bringing the cross-claim to account. The link must be such that the two are in effect interdependent, judgment on one cannot fairly be given without regard to the other, the defendant's claim calls into question or impeaches the plaintiff's demand. It is neither necessary, nor decisive, that claim and cross-claim arise out of the same contract.

The facts of the present case are in our view such that, subject to a matter yet to be mentioned, the defendants' cross-claim qualifies as a set-off and being clearly arguable prevents the entry of judgment summarily.

[56] Counsel for the plaintiffs submitted at the hearing that I should at least give judgement on the issue of liability and not quantum. I agree that if a plaintiff has “structure[d] his or her claim” appropriately, he or she can “seek summary judgement in relation to a part of his or her claim even if he or she cannot prove the

whole of it”.16 However, I do not think that this is an appropriate case for that power

to be exercised. The way that the claim has been structured is not readily amendable to that approach.

[57] The alleged set-offs in relation to Ipoh New Zealand Limited and Ms Okkerse’s legal and accounting fees are clearly pleaded as personal debts owed to Mr Burrell. The set-offs are not relevant to this proceeding because they have nothing to do with either the RB Trust or the Okkerse Trust.

[58] The alleged set-off for half the costs of Mr Burrell and Ms Okkerse’s daughter’s tertiary education is not relevant to this proceeding. This obligation arises under clause 2.3 of the Separation Agreement. The clause makes it clear that the tertiary education costs “are to be paid equally from the JY & RJ Burrell Family Trusts, or any trusts that they may be resettled on”. The evidence does not suggest that this is a liability that gives rise to a call on trust monies held by the plaintiffs. This cannot be used as a set-off because the evidence does not indicate that the JY &

_{RJ Burrell Family Trusts resettled on the Okkerse Trust.}

15 _{[1989] 1 NZLR 8 (CA) at 9 – 10.}

16 McGechan on Procedure (online looseleaf ed, Brookers) at [HR 12.2.10].

[59] The two sums that only appear in Mr Burrell’s affidavit ($50,000 relating to Ms Okkerse and Mr Burrell’s holidays and the $100,000 worth of RB Trust’s artwork that is in Ms Okkerse’s possession) cannot be used as set-offs. As it was pleaded and explained in evidence, the $50,000 sum is at best a relationship property issue that is not at all relevant to this proceeding. The $100,000 sum appears to be an issue that concerns Ms Okkerse personally, and not the Okkerse Trust.

Result

[60] The application for summary judgment is declined.

[61] Costs are reserved in accordance with the Court of Appeals decision in NZI v

_Philpott.17

_{Associate Judge Sargisson}

17 [1990] 2 NZLR 403; (1990) 3 PRNZ 695.