Clements v Thurlow [2012] NZHC 2449 (21 September 2012)

Last Updated: 16 October 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-2725 [2012] NZHC 2449

IN THE MATTER OF the enforcement of a Deed of Settlement

AND IN THE MATTER OF the sale of 8 Blundell Place, Birkenhead, Auckland, by a co-owner

BETWEEN LAYLA KATHLEEN CLEMENTS Plaintiff

AND CLIFFORD FRANK THURLOW Defendant

Hearing: On the papers

Counsel: R S Pidgeon for Plaintiff

Defendant in person

Judgment: 21 September 2012

_{JUDGMENT OF ASSOCIATE JUDGE R M BELL}

This judgment was delivered by me on 21 September 2012 at 4:30pm

pursuant to Rule 11.5 of the High Court Rules.

...................................

Registrar/Deputy Registrar

Solicitors:

Pidgeon Law (R S Pidgeon) P O Box 6535 Auckland 1141, for Plaintiff

_{Email: [e-mail] / [e-mail]}

Copy for:

C F Thurlow, 259 Lower Higham Road, Gravesend, Kent DA12 2NP, United Kingdom.

_{Email: [e-mail]}

_{Case Officer: [e-mail]}

CLEMENTS V THURLOW HC AK CIV-2012-404-2725 [21 September 2012]

Introduction

[1] In June 2011 Mr Thurlow and Ms Clements signed a deed settling a proceeding which Mr Thurlow had brought against Ms Clements. Under the deed Ms Clements was to transfer her one-tenth interest in a property at 8 Blundell Place, Birkenhead, Auckland, to Mr Thurlow, in consideration of the payment of $60,000 to be paid to the trust account of her lawyers. Mr Thurlow already held the remaining

90 per cent interest in the property. Mr Thurlow also agreed to pay an electrical bill and acknowledged that he was responsible for all outgoings on the property since Ms Clements had vacated in 2009. Ms Clements was to use the proceeds of settlement to clear a statutory land charge lodged by the Legal Services Agency. Under clause 7, the settlement was conditional on the parties entering into a settlement agreement with a third party, on terms that the third party would pay a sum of costs to Mr Thurlow and not make any claim against Ms Clements for contribution towards that payment. The deed was in full and final settlement of all issues and differences between them, whether raised in the proceedings or otherwise. Each party agreed to pay their own costs. They also agreed to execute all documents necessary to give effect to the deed. They acknowledged that they had been independently advised before signing.

[2] Ms Clements brings this proceeding to enforce the deed. She seeks specific performance of the provisions of clause 1 for transferring her interest in the property and for the payment of the $60,000. In addition, she also seeks orders for the sale of the property under subpart 5, Part 6 of the Property Law Act 2007 for the division of property among co-owners.

[3] While Ms Clements lives in New Zealand, Mr Thurlow lives in England. He objects to Ms Clements’ claim against him on the deed of June 2011 being brought in New Zealand. This decision is about his objection to this court hearing the case. Although Ms Clements has applied for summary judgment, this is not a decision on her summary judgment application.

[4] These questions arise:

1. Has Mr Thurlow submitted to the jurisdiction of this court?

2. Is it too late for Mr Thurlow to object to the jurisdiction of this court?

3. Should the court exercise its discretion to allow Mr Thurlow to reverse his submission?
   
4. Does Ms Clements have a good arguable case under r 6.29(1)(a)(i) of the High Court Rules for both the causes of action?
   

5. Should the court assume jurisdiction for each cause of action?

Has Mr Thurlow submitted to the jurisdiction of this court?

[5] Ms Clements objects that Mr Thurlow has submitted to the jurisdiction because the steps he has taken in the proceeding are inconsistent with any intention on his part to object to this court taking jurisdiction. If a person served overseas objects to being sued in New Zealand, r 5.49 allows him to file and serve an appearance objecting to the jurisdiction and stating his grounds for it. Mr Thurlow did not enter an appearance protesting the jurisdiction.

[6] After he was served, Mr Thurlow filed a notice of opposition to the application for summary judgment, an affidavit in opposition and submissions in opposition. Shortly afterwards he also filed a statement of defence. All of these documents were directed at the merits of the plaintiff’s claim. None of the documents said that Mr Thurlow objected to Ms Clements’ claim being heard in New Zealand. On 27 June 2012 I issued a minute giving further directions for the summary judgment application. On the same day Mr Thurlow filed two further memoranda directed at the merits of the case. On 9 July 2012 he filed a further memorandum, raising for the first time his objection to this court hearing the plaintiff’s claim.

[7] Ms Clements’ argument is that as Mr Thurlow has contested her claim on the

merits, he has waived any objection to this court hearing the case. An early authority

supporting this is Boyle v Sacker1 where it was held that the defendant’s objection to service out of the jurisdiction was too late, after he had already appeared and argued the merits of the plaintiff’s proceeding. In Rein v Stein Cave J said:2

It seems to me that, in order to establish a waiver, you must show that the party alleged to have waived his objection has taken some step which is only necessary or useful if the objection has been actually waived, or if the objection has never been entertained at all.

This has been followed in later cases.3 Under this approach, Mr Thurlow has taken steps which come within the dictum of Cave J. Mr Thurlow has submitted to the jurisdiction of the court because the steps he has taken are inconsistent with contesting the court’s jurisdiction.

[8] Mr Thurlow’s response is that Ms Clements’ claim was defective. It had shortcomings. He had to address those shortcomings in her claim first. In addressing those shortcomings, he was not submitting to the jurisdiction of the court. Mr Thurlow’s affidavit of 29 June 2012 runs for 92 paragraphs. It contains an extensive narrative of facts. That affidavit is directed at the merits of Ms Clements’ claim. Mr Thurlow’s notice of opposition raises grounds under five heads:

1. There were errors in the documents served and conditions in the deed of settlement had not been shown to be satisfied.
   

2. Ms Clements had forfeited her rights under the deed of settlement.

3. He attacked the evidential basis for the claim under the deed of settlement.
   

4. The orders sought were excessive, disproportionate and unreasonable.

_{5. Aspects of Ms Clements’ case were irrelevant to the orders sought.}

1 _{Boyle v Sacker (1888) 39 Ch D 249 (CA).}

2 _{Rein v Stein (1892) 66 LT 469 at 471.}

3 Williams & Glyn’s Bank v Astro Dimanico Compania Naviera SA [1984] 1 WLR 438 (HL) at

444; Air Nauru v Niue Airlines Ltd [1993] 2 NZLR 632.

[9] Those matters were directed at the merits of the case and went beyond simply addressing defects in Ms Clements’ to elicit a better presentation of her case. But even in attacking the alleged deficiencies in the case, Mr Thurlow was addressing the merits, and was by-passing any challenge to jurisdiction. Under the case law, he has submitted to the jurisdiction of this court.

[10] Ms Clements also argued that Mr Thurlow had submitted to the jurisdiction because he was plaintiff in the original proceeding which was the subject of the deed of settlement. The rule that Ms Clements was relying on is that a defendant who files a counterclaim to a plaintiff’s proceeding submits to the jurisdiction.4 That does not apply here. His original proceeding is separate from this case. Mr Thurlow was entitled to begin his original proceeding in New Zealand but, having settled it, later to contest this court’s jurisdiction for another proceeding.

Is it too late for Mr Thurlow to object to the jurisdiction of this court?

[11] The standard approach is that once a foreign defendant has submitted to the jurisdiction of a New Zealand court, the defendant has made an irrevocable election, preventing the defendant from challenging the jurisdiction later.5 This approach treats the doors of the court as a one-way turnstile. It denies foreign defendants any opportunity to challenge the jurisdiction of the court once they have taken any step in the proceeding consistent with submitting to the jurisdiction of the court. It does

not allow for back-tracking or for a defendant to reconsider his submission to jurisdiction.

[12] Jurisdiction questions need to be resolved early in a proceeding. For the parties to devote resources to litigating a proceeding, they need certainty whether the proceeding is to run in the court chosen by the plaintiff. However, that requirement

_{for early certainty as to jurisdiction does not require that the opportunity to raise a}

4 Factories Insurance Co Ltd v Anglo-Scottish General Commercial Insurance Co Ltd (1913)

_{29 TLR 312 (CA).}

5. There is an exception when jurisdiction cannot be conferred by submission or waiver, but has been taken away by statute: Rothmans of Pall Mall (Overseas) Ltd v Saudi Arabian Airlines Corp [1981] 1 QB 368 at 375. In those cases the defendant may raise the objection later, but that is not the case here.

jurisdictional challenge is automatically lost if a litigant has taken some steps directed at other issues in the proceeding.

[13] A more flexible approach should be available. Certain considerations require this.

[14] The traditional approach to proceedings against foreign defendants is that the court does not lightly assume jurisdiction.6 A no-exit policy under which a submission to jurisdiction is irrevocable is at odds with this traditional caution against assuming jurisdiction over foreign defendants.

[15] It is not always clear-cut whether a defendant has submitted to the jurisdiction. In Williams & Glyn’s Bank v Astro Dimanico Compania Naviera SA,7 a foreign defendant filed an application to set aside service but at the same time applied for a stay of proceeding. No less a judge than Bingham J held that in seeking a stay of proceeding, the defendant had submitted to the jurisdiction. He was overruled on appeal. Similar technicality can be found in a foreign judgment enforcement case, Henry v Geoprosco International Ltd.8 A foreign defendant was held to have submitted to the jurisdiction of the Supreme Court of Alberta, when the defendant applied to set aside service out of the jurisdiction on forum non conveniens grounds. On the other hand, if the defendant had objected that the Alberta Court did not have jurisdiction to hear the proceeding, that would not have been a submission to the jurisdiction. A case going the other way is Equiticorp Industries Ltd v Hawkins9 where a foreign defendant who protested the jurisdiction but also applied for security for costs and for production of a document was held on the facts not to have waived its objection to the court assuming jurisdiction.

[16] A foreign defendant served with a New Zealand proceeding has a range of options including defending on the merits in New Zealand, objecting to New

6. Wing Hung Printing Co Ltd v Saito Off-shore Pty Ltd [2011]1 NZLR 754 (CA) [27]-[29], citing Société Générale de Paris v Dreyfus Bros v Dreyfus Bros (1885) 29 Ch D 239 at 243, Kuwait Asia Bank v National Mutual Life Nominees Ltd (No.2) [1989] 2 NZLR 50 (CA), Poynter v Commerce Commission [2010] 3 NZLR 300.

7 Williams & Glyn’s Bank v Astro Dimanico Compania Naviera S A (1984) 1 WLR 438 (HL)

_{above n 3, at 444.}

8 _{Henry v Geoprosco International Ltd [1976] 1 QB 726.}

9 Equiticorp Industries Ltd v Hawkins [1991] 3 NZLR 700 (HC) at 714-717.

Zealand courts assuming jurisdiction, proposing that the matter be heard in some other law area, and taking no steps at all in New Zealand (on the basis that any judgment would not be enforceable outside New Zealand under the judgment recognition rules of other law areas). In choosing which course to take, the defendant may need to take into account a large number of complex matters covering tactical considerations, questions of New Zealand law and foreign law, and commercial and reputational matters.

[17] The time within which the foreign defendant can decide which course to take is limited. Under r 5.49 the defendant may file an appearance no later than the time allowed for filing a statement of defence. Assessing the appropriate course to take may require consulting not only the defendant’s local lawyers (for example, on whether any New Zealand judgment would be enforceable in the defendant’s own country) but also New Zealand lawyers, so as to be properly advised as New Zealand law and the practice and procedures of this court.

[18] While the ideal course is to file an appearance objecting to jurisdiction under r 5.49, that procedure is not mandatory.10 A statement of defence may raise the question of jurisdiction, as well as contesting the merits of the plaintiff’s claim. A foreign defendant served with a proceeding issued out of New Zealand is faced with a difficult decision whether to defend on the merits or to object to the case being heard in New Zealand.

[19] In other cases, there may be no room for flexibility, as in enforcement and recognition of judgments at common law or under statute,11 when a court has to decide whether there has been a submission to jurisdiction. Those are cases where a proceeding has come to an end and another court has to decide after the event whether steps taken in the proceeding amounted to submission or waiver. But that does not mean that flexibility must also be precluded while the proceeding is still on

_foot.

10 McGechan on Procedure (looseleaf ed) at [HR 5.49.10]; Rothmans of Pall Mall (Overseas) v Saudi Arabian Airlines Corp [1981] 1 QB 368 (HC) 375; Chevalier Wholesale Produce Ltd v Joes Farm Produce Ltd HC Auckland CIV-2010-404-4229 17 November 2011 at [5].

11. For example, as under Reciprocal Enforcement of Judgments Act 1934 s 6(1)(3)(a)(i) and its counterparts in other Commonwealth statutes.

[20] The court is in control of the proceeding. In regulating the conduct of the case before it, the court is concerned to secure the just, speedy and inexpensive determination of the proceeding.12 That object may include allowing the proceeding to run in some other forum. To achieve that object, it has an extensive power to allow amendments under r 1.9:

1.9 Amendment of defects and errors

(1) The court may, before, at, or after the trial of any proceeding, amend any defects and errors in the pleadings or procedure in the proceeding, whether or not there is anything in writing to amend, and whether or not the defect or error is that of the party (if any) applying to amend.

(2) The court may, at any stage of a proceeding, make, either on its own initiative or on the application of a party to the proceedings, any amendments to any pleading or the procedure in the proceeding that are necessary for determining the real controversy between the parties.

(3) All amendments under subclause (1) or (2) may be made with or without costs and on any terms the court thinks just.

(4) This rule is subject to rule 7.18 (no steps after the setting down date without leave).

(emphasis added)

[21] In many steps in a proceeding, a litigant has the opportunity to amend steps taken in the light of further consideration. In particular, amendments to the pleadings are not defeated by waiver arguments. A defendant who has not pleaded an affirmative defence in a statement of defence is not held to have waived that defence, so as to debar him from later amending his pleading to advance that defence. Waiver as a ground to prevent a party from asserting a position he had not earlier taken is applied more strongly on matters of substance than in a procedural

context.13 On this point the distinction Lord Atkin drew between electing between

rights and electing between remedies in United Australia Ltd v Barclays Bank remains valuable.14 If a defendant can reconsider and amend the defences he relies on, it may also be open to him to reconsider his submission to the jurisdiction, if that

_{can be done without undue prejudice to other parties.}

12 _{High Court Rules 2008, r 1.2.}

13 _{For example Wright Stephenson Ltd v Copland [1964] NZLR 673 (SC) at 679.}

14 United Australia Ltd v Barclays Bank [1941] AC 1 (HL) at 29-30.

[22] Rule 1.9 gives the court power to amend defects and errors in procedure so as to enable the real controversy between the parties to be determined. If the proper determination of the controversy between the parties requires that it be heard in some other forum, then the error in submitting to this court is capable of cure under r 1.9 as an error in procedure. The flexibility required is met by r 1.9. The power of amendment under r 1.9 can be exercised to allow a foreign defendant, who is treated as having submitted to the jurisdiction of the court, to undo those steps so as to be able to mount a challenge to the court hearing the case. The power of the court to allow amendment is discretionary and will be exercised with regard to the interests of all parties and of justice.

Should the court exercise its discretion to allow Mr Thurlow to reverse his submission?

[23] It is desirable that jurisdiction questions be decided promptly in a proceeding. Delay in raising contest as to jurisdiction will count against allowing amendments, once the parties have spent time on the merits.

[24] In this proceeding, Mr Thurlow filed his first documents promptly, on

20 June 2012. He raised the jurisdiction issue on 9 July 2012, less than three weeks later. Although he raised the issue after he had submitted to the jurisdiction, he raised the matter promptly, before the parties had committed significant further effort to the merits of the case. Not only was he at the usual disadvantage of a foreign litigant in having to deal with a legal system with which he was not familiar, but he was also unrepresented.

[25] In these circumstances, I exercise the discretion under r 1.9 to allow him to apply under r 5.49(3) on the basis that his notice of opposition, affidavit in opposition and submissions in opposition, all documents directed at the merits of the plaintiff’s case, are withdrawn.

Does Ms Clements have a good arguable case under r 6.29(1)(a)(i) of the High

Court Rules for both causes of action?

[26] Mr Thurlow’s challenge to the jurisdiction of this court is decided under

r 6.29:

6.29 Court's discretion whether to assume jurisdiction

(1) If service of process has been effected out of New Zealand without leave, and the court's jurisdiction is protested under rule 5.49, the court must dismiss the proceeding unless the party effecting service establishes—

(a) that there is—

(i) a good arguable case that the claim falls wholly within 1 or more of the paragraphs of rule 6.27; and

(ii) the court should assume jurisdiction by reason of the matters set out in rule 6.28(5)(b) to (d); or

(b) that, had the party applied for leave under rule 6.28,—

(i) leave would have been granted; and

(ii) it is in the interests of justice that the failure to apply for leave should be excused.

(2) If service of process has been effected out of New Zealand under rule 6.28, and the court's jurisdiction is protested under rule 5.49, and it is claimed that leave was wrongly granted under rule 6.28, the court must dismiss the proceeding unless the party effecting service establishes that in the light of the evidence now before the court leave was correctly granted.

(3) When service of process has been validly effected within New Zealand, but New Zealand is not the appropriate forum for trial of the action, the defendant may apply for a stay, or for a dismissal of the proceeding under rule 15.1.

[27] Ms Clements says that she was entitled to serve the proceeding on Mr Thurlow under r 6.27 without first obtaining leave. Mr Thurlow says that Ms Clements has not established a good arguable case that the claim comes within any of the paragraphs under r 6.27. Under his argument, the matter must be considered under r 6.29(1)(b).

[28] It is accordingly necessary to establish whether Ms Clements has established a good arguable case that the claim falls wholly within one or more of the paragraphs of r 6.27. That will then determine the next question to be decided, that is, whether under r 6.29(1)(a)(ii) the court should assume jurisdiction by reason of the matters set out in r 6.28(5)(b)-(d) or whether she needs to satisfy the test under r 6.29(1)(b) - that on an application for leave under r 6.28 leave would have been granted and that it is in the interests of justice that the failure to apply for leave should be excused.

[29] In Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd, the Court of Appeal said:15

The good arguable case test required at this stage does not relate to the merits of the case, but to whether the claim falls within one or more of the circumstances under r 6.27 in which service overseas may be effected without leave.

[30] The Court of Appeal also made it clear that under r 6.29(1)(a)(i) where there is more than one cause of action, it is necessary to establish whether the plaintiff has made out a good arguable case that each cause of action falls wholly within one or more of the paragraphs in r 6.27. If the court found that there was a cause of action which did not wholly fall within one of the paragraphs in r 6.27, the court could still consider whether to permit service under r 6.29(1)(b). The court noted that the rules provided for a flexible approach, which allows the court to protect an overseas party from those parts of a proceeding found to be lacking in merit or lacking any real or substantial connection with New Zealand. At the same time, the plaintiff who establishes a proper case to bring proceedings against a foreign defendant will be entitled to have the case heard in New Zealand to the extent that it meets the criteria

in the rules.16

[31] In this case the notice to defendant served overseas attached to the notice of proceeding refers to three paragraphs under r 6.27(2) (b) (f) and (j):

6.27 When allowed without leave

...

(2) An originating document may be served out of New Zealand without leave in the following cases:

...

(b) when a contract sought to be enforced or rescinded, dissolved, annulled, cancelled, otherwise affected or interpreted in any proceeding, or for the breach of which damages or other relief is demanded in the proceeding—

_{(i) was made or entered into in New Zealand; or}

15 _{Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd above n 6, at [33].}

16 Ibid, at [66]-[68].

(ii) was made by or through an agent trading or residing within

New Zealand; or

(iii) was to be wholly or in part performed in New Zealand; or

(iv) was by its terms or by implication to be governed by New

_{Zealand law:}

...

(f) when the proceeding relates to the carrying out or discharge of the trusts of any written instrument of which the person to be served is a trustee and which ought to be carried out or discharged according to the law of New Zealand:

...

(j) when the claim arises under an enactment and either—

(i) any act or omission to which the claim relates was done or occurred in New Zealand; or

(ii) any loss or damage to which the claim relates was sustained in New Zealand; or

(iii) the enactment applies expressly or by implication to an act or omission that was done or occurred outside New Zealand in the circumstances alleged; or

(iv) the enactment expressly confers jurisdiction on the court over persons outside New Zealand (in which case any requirements of the enactment relating to service must be complied with):

[32] The plaintiff ’s first cause of action, for specific performance of the deed of June 2011, is within paragraph (b). Mr Thurlow’s evidence shows that the deed was entered into in Auckland, New Zealand. The provisions for payment, transfer of title and discontinuance of proceedings were all to be performed in New Zealand. The deed is governed by New Zealand law.

[33] Mr Thurlow does not take issue with any of these matters. However, his submissions are directed towards showing that Ms Clements does not have a sound claim under the deed. At this stage, that inquiry is not relevant. The court is only concerned whether Ms Clements has a good arguable case that the contract comes within paragraph (b). On Mr Thurlow’s own evidence in his affidavit, she clearly has.

[34] Mr Thurlow is on stronger ground that Ms Clements does not have a good arguable case that any cause of action comes within paragraph (f). Ms Clements has not expressly addressed that objection. I agree with Mr Thurlow. The deed the subject of the first cause of action does not establish any trust. Ms Clements has not made out a good arguable case as to paragraph (f).

[35] Ms Clements’ second cause of action is under Subpart 5 of Part 6 of the Property Law Act 2007. In Wing Hung the Court of Appeal held that “claim” under r 6.29(1)(a)(i) is an amalgam of the factual and legal basis for the relief sought. It referred to the use of “claim” in r 5.25 in support. “Claim” in r 6.27(2)(j) is used in the same sense. However, it is not enough that Ms Clements has a claim under the Property Law Act. She must also establish that her claim comes within one of the four sub-paragraphs to paragraph (j). The first sub-paragraph requires that the claim relate to an act or omission that was done or occurred in New Zealand. That requirement may be satisfied when a claim is made under the law of obligations and for some relevant past breach of an obligation. However, Ms Clements’ claim seeks a division of property among co-owners. Her claim does not relate to past acts or omissions, but is prospective and is directed at a separation of the parties’ respective interests in the property. The relevant considerations the court is required to have regard to under s 342 are directed at the present state of affairs more than past acts or omissions. In particular, I note that in this case Ms Clements does not appear to be relying on any contributions she made to the cost of improvements or the maintenance of the property. Instead, her application is directed at obtaining a realisation of her interest in the property without relying on any past acts or omissions on the part of Mr Thurlow.

[36] Similarly, the second sub-paragraph is not satisfied. Her claim does not relate to any loss or damage alleged to have been sustained but is, instead, directed towards future realisation of her interest in the property.

[37] The third sub-paragraph does not apply: this part of the Property Law Act

2007 does not expressly or by implication apply to any act or omission that might have occurred outside New Zealand.

[38] The fourth sub-paragraph requires an express provision in an enactment that the court will have jurisdiction over persons outside New Zealand. There is no provision to that effect under the Property Law Act 2007 that could apply in this case.

[39] Accordingly, I find that Ms Clements does not have a good arguable case, that her second cause of action comes within r 6.27(2)(j).

[40] Paragraph (e) allows service out of the jurisdiction without leave when the subject matter of the proceeding is land or other property situated in New Zealand. At first sight, Ms Clements seems to have a claim within paragraph (e). In McConnell Dowell Contractors ltd v Lloyd’s Syndicate 396,17 the Court of Appeal held that a plaintiff could rely on grounds outside those in the notice if there is no prejudice to the defendant. However, Ms Clements has not relied on paragraph (e).

Mr Thurlow has not been given the opportunity to submit on paragraph (e). Accordingly, I leave that paragraph aside.

[41] As Ms Clements has established a good arguable case that her first cause of action comes within paragraph (b), but she has not established that her second cause comes within paragraph (f) or paragraph (j), the other paragraphs relied on by her, it is necessary to consider the test under r 6.29(1)(a)(ii) for the first cause of action, and the test under r 6.29(1)(b) for the second cause of action.

Should the court assume jurisdiction for each cause of action?

First cause of action, r 6.29(1)(a)(ii)

[42] Under this sub-rule, Ms Clements has to establish the court should assume jurisdiction because:18

1. there is a serious issue to be tried on the merits;

_{2. New Zealand is the appropriate forum for the trial; and}

17 McConnell Dowell Contractors Ltd v Lloyd’s Syndicate 396 [1988] 2 NZLR 257 (CA) at 270.

3. any other relevant circumstances support the assumption of jurisdiction
   

Is there a serious question to be tried on the merits?

[43] In Wing Hung, the Court of Appeal noted the difference between the “good arguable test” under r 6.29(1)(a)(i) and the standard of “serious issue to be tried on the merits” under r 6.29(1)(a)(ii):19

[40] The distinction between the good arguable case test prescribed by r 6.29(1)(a)(i) in relation to the threshold issue and the standard of serious issue to be tried on the merits when considering the second stage under r 6.29(1)(a)(ii) evidently follows the distinction adopted by the House of Lords in Seaconsar Far East Ltd v Bank Markazi [[1994] 1 AC 438]. Lord Goff (with whom the other members of the House agreed) concluded that the threshold issue of jurisdiction under the English Order 11 procedure then in force was to be established on the basis of the good arguable case criterion. But the Court of Appeal had erred in applying the same standard when assessing the merits. It was enough for Seaconsar to establish a serious issue to be tried [at 456-457]. It is apparent that the House of Lords considered the serious issue standard was less stringent than the good arguable case criterion [at 454].

[41] The Rules Committee must have adopted the Seaconsar approach in formulating the new rules but, in practice, the distinction between the two standards may be difficult to draw. It is clear however that the good arguable case test does not require the plaintiff to establish a prima facie case. [See discussion in Seaconsar at 453]. This recognises that disputed questions of fact cannot be readily resolved on affidavit evidence. On the other hand, there must be a sufficiently plausible foundation established that the claim falls within one or more of the headings in r 6.27(2). The Court should not engage in speculation.

[42] The serious issue to be tried test to be applied at the second stage of the inquiry was described by Lord Goff in Seaconsar as whether

“... at the end of the day, there remains a substantial question of law or fact or both, arising on the facts disclosed by the affidavits, which the plaintiff bona fide desires to try ...” [at 452].

[44] It is at this stage that Mr Thurlow’s submissions on the merits are relevant.

_{On the merits, Mr Thurlow raises these matters:}

19 Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd, above n 7, at [40]-[42].

1. As there is no date fixed for payment, he cannot be in default of any term requiring him to pay.

2. There is no evidence that the condition in clause 7 of the deed has been satisfied.

[45] He raises additional matters in his evidence which he has not said give him grounds for defence, but which might be capable of being raised in defence:

1. He alleges dishonesty on the part of Ms Clements inducing him to enter into the contract – alleged concealment of a cocaine addiction.

2. He also refers to payments he made for her benefit after the parties entered into the deed, matters potentially capable of being taken into account.

I also note that in a claim for specific performance, the court retains a discretion whether to grant relief.

[46] Mr Thurlow’s first point is that the deed does not set any time for payment. He argues that he cannot be in default of any provision for payment. However, it is well established that where a contract does not provide a date for payment, the law will require payment within a reasonable time. McMorland’s Sale of Land says:20

Normally the contract will specify a settlement date, but if it does not it is implied by law that settlement is to take place within a reasonable time.

Mr Thurlow’s argument is weaker than Ms Clements’ on this aspect.

[47] He is on stronger ground with his second point. At present the case for Ms Clements does not show that the condition in clause 7 of the deed has been satisfied. His argument is an evidential one: that there is no evidence to prove

_{satisfaction of the deed. That does not mean that Ms Clements may not be able to}

20 D W McMorland Sale of Land (3rd ed, Cathcart Trust, Auckland, 2011) at 449.

prove that the condition has been met. Her case is not unarguable simply because she has not presented that evidence at this stage.

[48] The other matters have not been developed by him into arguable defences. At this stage, under Lord Goff’s test in Seaconsar,21 Ms Clements has established that there remains a substantial question of law or fact, or both, arising from the facts disclosed by the parties which she bona fide wishes to try. She does not have to show more. In particular she does not have to show that she will inevitably overcome all potential defences.

Is New Zealand the appropriate forum for the trial?

[49] The appropriate forum question is derived from the forum non conveniens ground, for which the leading authority is Spiliada Maritime Corporation v Consulex Ltd.22 The inquiry is where the case may be tried more suitably in the interests of all the parties and of the ends of justice. However, the onus is on the plaintiff, not the defendant.23 In Spiliada, Lord Goff applied a “clearly more appropriate” test, whereas in New Zealand a plaintiff is only required to show that a New Zealand court is more appropriate rather than clearly more so:24 Turn and Wave Ltd v North Star Accounts Pty Ltd and Chevalier Wholesale Product Ltd v Joes Farm Produce Ltd.25

[50] I assume for the purpose of argument that Ms Clements may fail on her application for summary judgment. A summary judgment hearing cannot pre-empt a jurisdiction decision.26 The choice of jurisdiction requires a consideration of an appropriate forum on the basis that a full hearing on the merits may be required. The text of the rule supports this. The question is whether New Zealand is the

_{appropriate forum for the trial, not for a summary judgment hearing. To hold that a}

21 _{Seaconsar Far East Ltd v Bank Markazi [1994] 1 AC 438.}

22 _{Spiliada Maritime Corporation v Consulex Ltd [1987] AC 460 (HL).}

23. High Court Rules 2008, r 6.28(5)(c); and Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd, above n 7, at [44].

24 _{Ibid, at [142].}

25 Turn and Wave Ltd v North Star Accounts Pty Ltd HC Auckland CIV-2010-404-2258,

23 December 2010 at [80], Chevalier Wholesale Product Ltd v Joes Farm Produce Ltd, above n

_{10, at [34].}

26 Advanced Cardiovascular Systems Inc v Universal Specialties Ltd [1997] 1 NZLR 186 (CA).

hearing on the merits will not be required because the plaintiff will succeed on her summary judgment application will put the cart before the horse.

[51] I assume that, given Mr Thurlow’s English residence and domicile, an English court would accept jurisdiction in a claim for specific performance, following Penn v Lord Baltimore.27 There is potentially an alternative forum in another jurisdiction available to hear the first cause of action.

[52] In establishing appropriateness, it can be helpful to have regard to the matters in issue between the parties.28 On a defended hearing of Ms Clements’ claim for specific performance against Mr Thurlow, these matters are likely to arise:

1. Construction of the contract.

2. Whether the condition in paragraph 7 has been satisfied.

3. Whether Mr Thurlow was induced to enter into the deed by misrepresentations by Ms Clements and whether those misrepresentations give any relief.

4. Whether payments which Mr Thurlow says he made in England for the benefit of Ms Clements can be taken into account.

[53] The deed is governed by New Zealand law. On the whole, it is preferable that a court determine a case applying its own law, rather than foreign law. In The Eleftheria, Brandon J said:29

Apart from the general advantage which a foreign court has in determining and applying its own law, there is a significant difference in the position with regard to appeal. A question of foreign law decided by a court of the foreign country concerned is appealable as such to the appropriate appellate court of that country. But a question of foreign law decided by an English court on expert evidence is treated as a question of fact for the purposes of appeal, with the limitations in the scope of an appeal inherent in that categorisation. This consideration seems to me to afford an added reason for saying that, in general and other things being equal, it is more satisfactory for the law of a

27 _{Penn v Lord Baltimore [1750] EngR 99; 51 Ves. Sen. 444, 27 ER 1132.}

28 _{Turn and Wave Ltd v North Star Accounts Pty Ltd at [82]-[84].}

29 The Eleftheria [1970] P 94 at 105.

foreign country to be decided by the courts of that country. Moreover, by more satisfactory I mean more satisfactory from the point of view of ensuring that justice is done.

[54] While England and New Zealand are both common law jurisdictions and decisions of English courts carry considerable persuasive authority in New Zealand, there are nuanced differences between English contract law and New Zealand contract law, especially in respect of contractual misrepresentation under the Contractual Remedies Act 1979, which has replaced the former rules of common law and equity as to rescission. This aspect favours New Zealand.

[55] Clause 7 of the deed required a condition to be satisfied. The evidence for that condition will be wholly within New Zealand and will require witnesses living in Auckland.

[56] Mr Thurlow’s allegations of misrepresentation are likely to require evidence from people living in Auckland, as those allegations bear on Ms Clements’ conduct both before and after the deed was signed. She has lived in New Zealand for some years now. Mr Thurlow has also referred to people living in England who may be required to give evidence on the misrepresentation allegations, but the matters on which he says they will give evidence, the relationship between Ms Clements and Mr Thurlow while they both lived in England, seem only remotely relevant. Arrangements may be made for evidence to be given remotely, as under s 105 of the Evidence Act 2006.

[57] If the case were heard in New Zealand, Mr Thurlow would have to attend in New Zealand to give evidence at the hearing. On the other hand, if the case were heard in England, the people who would have to travel from New Zealand would include not only the plaintiff, but other witnesses on her behalf, especially those required to prove the satisfaction of condition 7 of the deed and evidence addressing misrepresentation allegations. On balance, the location of witnesses favours New Zealand over England.

[58] The relief sought is relevant. The order for specific performance is directed at requiring conveyancing to be carried out in New Zealand. A New Zealand court is

better equipped to supervise performance of a contract to transfer interests in New

Zealand land than a foreign court.

[59] Taking these matters all together, I am satisfied that the New Zealand High Court, rather than a court in England, is more appropriate for hearing the plaintiff’s claim for specific performance.

Do other relevant circumstances support an assumption of jurisdiction?

[60] Rule 6.28(5)(d) allows other matters to be considered. The plaintiff must establish that any other relevant circumstances must support an assumption of jurisdiction. The potential for other relevant circumstances not to support an assumption of jurisdiction allows for the exercise of a residual discretion not to assume jurisdiction, even if the plaintiff has succeeded on the other matters under r

6.29(1)(a). For this case there are no new factors under this head. There is a dispute between the parties as to the deed of June 2011. Ms Clements has an arguable claim. Her decision to take proceedings to enforce the deed is not misconceived, an abuse of process and in any other sense inappropriate. Similarly, given that the parties’ interests in the Birkenhead property are the subject of the deed to be enforced, it is understandable that she has brought her claim for specific performance in New Zealand. But that simply restates in another way the matters already set out above. There are no relevant factors that count against this court hearing the claim for specific performance plaintiff.

Second cause of action – rule 6.29(1)(b)

Does the second cause of action have a real and substantial cause of action with

New Zealand?

[61] Ms Clements must establish under r 6.28(5)(a) that her claim under the Property Law Act has a real and substantial connection with New Zealand. Her claim under the Property Law Act goes to the division co-owners’ interests in land in New Zealand. This cause of action has a very real and substantial connection with New Zealand, far greater than with any other country.

[62] As to a serious question to be tried on the merits under r 6.28(5)(b), Ms Clements’ application for sale of the property is made against the background that the parties had entered into a deed under which Mr Thurlow had undertaken to pay her $60,000 for her to transfer her interest in the property to him. Under that deed the parties clearly intended to separate their interests in the property. Even if Mr Thurlow establishes a defence to the claim, there is background evidence of the parties’ shared intention to separate their interests in the property. Under s 339(1) of the Property Law Act, a range of orders is available. While Ms Clements has sought an order for the sale of the property, another option the court might consider would be to require Mr Thurlow to buy out Ms Clements at a fair and reasonable price under s 339(1)(c). Mr Thurlow has referred to his 90 per cent ownership of the property and complains that Ms Clements’ 10 per cent interest in the property ought not to allow her to require the sale of the property. That is certainly a relevant consideration under s 339 and under s 342(a). That does not mean that at this stage the court can say that Ms Clements’ claim is bound to fail. Even if the court were not to order a sale, the court might still make other orders under s 339 aimed at separating their interests in the property. Notwithstanding Mr Thurlow’s submissions, there is a serious issue to be tried on the merits in the second cause of action.

Is New Zealand the appropriate forum for the trial?

[63] As to appropriate forum under r 6.28(5)(c), in an application under s 339 for a division of property in New Zealand, a New Zealand court is pre-eminently the appropriate forum. The court will apply New Zealand law as the lex situs, and it will be applying its own law. The provisions for division of property under the Property Law Act 2007 are still relatively new and the application of the statute is still being settled. A New Zealand court is better equipped to apply those provisions while they are still relatively new, rather than a foreign court, which will not be assisted by much relevant New Zealand authority.

[64] The rule in British South Africa Co v Companhia de Moçambique30 is still good law in England: Hesperides Hotels Ltd v Muftizade.31 Under that rule an English court (and a New Zealand court) will not take jurisdiction in respect of the title to and possession of foreign land, and a court will not hear a claim for trespass

to foreign land, even if title is not in issue. On Ms Clements’ application under Subpart 5 of Part 6 of the Property Law Act, the court will be required to decide whether Mr Thurlow’s interest in the property should be converted into an interest in the sale proceeds of the property or whether to grant alternative relief, such as to require him to increase his interest in the property to 100 per cent ownership, as well as refusing relief. Adjustments to interests in the property are in issue. An English court would refuse jurisdiction for the second cause of action under the Moçambique rule.

[65] In taking title to New Zealand land, while retaining his England residence, Mr Thurlow can be taken to have accepted that any legal proceedings relating to that property are more likely to be heard in New Zealand than in any other part of the world. Having bought the property on that basis, he cannot complain of hardship in having to come to New Zealand for an application under s 339 brought by his co- owner.

[66] As already stated, New Zealand is overwhelmingly the appropriate forum for the claim in the second cause of action.

Other relevant circumstances?

[67] Under r 6.28(5)(d), no new factors have been raised that would count against the court assuming jurisdiction. Instead the fact that most countries follow some rule similar to the Moçambique rule means that the claim could only be heard in New

_{Zealand. That counts in favour of a New Zealand court taking jurisdiction.}

30 _{British South Africa Co v Companhia de Moçambique [1893] AC 602.}

31 Hesperides Hotels Ltd v Muftizade [1979] AC 508 (HL).

[68] Under r 6.29(1)(b)(ii), the court must also be satisfied that it is in the interests of justice that the failure to apply for leave should be excused.

[69] The failure to seek leave arises from a mistaken reliance on paragraph (j) of r 6.27. Ms Clements might not have required leave if she had instead invoked paragraph (e). Ms Clements’ second cause of action can really only be heard in New Zealand. Ms Clements’ first cause of action did not require leave of the court because it came within paragraph (b) of r 6.27. It is appropriate that both causes of action be heard together, notwithstanding the failure to seek leave to serve abroad under r 6.28 for the second cause of action. The interests of justice require that the failure to apply for leave be excused.

Outcome

[70] Accordingly I find that under r 6.29, Ms Clements has established that her claims should be heard in this court. Mr Thurlow’s objection to this court hearing the proceeding is dismissed.

[71] At this stage, Mr Thurlow’s appearance in this proceeding is solely for the purpose of protesting this court’s jurisdiction. Now that the court has decided the jurisdiction question against him, Ms Clements is able to maintain her application for summary judgment. It is not appropriate that I decide the summary judgment application now, although I earlier indicated that it could be decided on the papers.

[72] Mr Thurlow should now give notice whether he now opposes the application for summary judgment, in the light of the court’s ruling that it has jurisdiction. If Mr Thurlow elects to defend the application for summary judgment, he should appreciate that in contesting the application on its merits now, he will be submitting to the jurisdiction of this court.

[73] I direct that Mr Thurlow is to give notice within 15 working days of this decision whether he now contests the application for summary judgment.

[74] If Mr Thurlow gives notice that he will contest the summary judgment application, then I give these directions, which are an adaptation of the directions given in paragraph [4] of my minute of 27 June 2012:

1. Mr Thurlow may file any further affidavits in opposition, and any amended pleadings within 15 working days of this decision. He is not required to repeat anything that he has already put before the court.

2. Any affidavits in reply by the plaintiff are to be filed and served within a further 15 working days.

3. The plaintiff is also to file her submissions, together with copies of authorities, by the same date.

4. Any submissions in opposition by Mr Thurlow are to be filed and served within a further 10 working days. He should also provide copies of any legal authorities he relies on.

5. The plaintiff may file and serve any submissions strictly in reply within a further 5 working days. I will then decide the summary judgment application on the papers.

[75] Any application for costs may be made by memorandum, after the parties have exchanged proposals as to costs.

[76] I have given this decision in chambers on an interlocutory application. Under r 2.3(2), the normal period for applying for review of the decision is 5 working days after receipt of notice of the giving of the decision. Mr Thurlow is in England. He is self-represented. If he wishes to review this decision, he would benefit from taking legal advice. Five working days is not enough time for him to obtain advice and instruct a lawyer whether a review should be filed. Accordingly, I extend the time for Mr Thurlow to apply to review this decision to 15 working days after this

_{decision is delivered.}

..........................................

Associate Judge R M Bell