Bergman v Bergman [2013] NZHC 910 (29 April 2013)

Last Updated: 7 May 2013

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2012-488-830 [2013] NZHC 910

BETWEEN CHRISTIAAN DIEDRICK BERGMAN Plaintiff

AND ARTHUR THEODORUS BERGMAN Defendant

Hearing: 10 April 2013

Appearances: R C Mark for Plaintiff

D James for Defendant

Judgment: 29 April 2013

_{RESERVED JUDGMENT OF ASSOCIATE JUDGE R M BELL}

This judgment was delivered by me on 29 April 2013 at 5:00pm

pursuant to Rule 11.5 of the High Court Rules.

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

Registrar/Deputy Registrar

Solicitors:

R C Mark, P O Box 172 Kerikeri, for Plaintiff

Email: [e-mail]

Palmer Macauley (David James) P O Box 576 Kerikeri, for Defendant

Email: [e-mail]

BERGMAN V BERGMAN HC WHA CIV-2012-488-830 [29 April 2013]

[1] The questions in this summary judgment application are:

(a) Has Arty Bergman satisfied me that he has cleared his debt of

$159,549.65 to his brother, Chris, by making timber rights available to

Chris?

(b) Has Arty Bergman satisfied me that Chris has no defence to his claim that he has overpaid Chris by $39,950.35?

Christiaan Bergman (Chris) and Arthur Bergman (Arty) were shareholders in a family company, Mahoe Farm Kerikeri 1978 Ltd. Chris sold his shares to Arty under a written agreement bearing the date 26 April 2009. The vendor’s name in the agreement is Christopher Bergman, but there is no dispute that Chris is the vendor under the agreement. The price of the shares was $159,549.65, but could be adjusted on reassessment by the Inland Revenue. Chris transferred the shares to Arty on settlement, 15 April 2009, but agreed to be paid later. Clause 3 said:

The Price will be satisfied by the Purchaser signing and handing to the Vendor or the Vendor’s solicitor on settlement and acknowledging on a deed in identical terms to the copy attached and marked ‘B’.

[2] There is an acknowledgement of debt, also dated 26 April 2009, in the following terms:

Christopher Bergman and I, Arthur Bergman, acknowledge:

• I owe you $159,549.65 (“the Debt”) which amount was advanced to me by you on 15 April 2009. The date is repayable interest-free and upon demand being made by you. The words “upon demand” will have the same meaning assigned to them in the Fifth Schedule of the Chattels Transfer Act 1924, but demand may not be made before 15

April 2019.

• You may demand payment in timber in part or in full satisfaction of the debt, of rights at a value (GST inclusive) to be agreed between us, and failing agreement, then payment will be made in money by cleared funds.

Both Chris and Arty have signed the acknowledgement of debt.

[3] Arty contends that he has satisfied the debt out of timber rights. Chris acknowledges that Arty transferred logging rights to two blocks at Ohura owned by Joanna Loft and David Loft, which Chris values at $27,428.00, in part repayment of the debt, but says that no other payments have been made and no other timber rights have been transferred to him. In this proceeding he seeks declarations that Arty has not repaid the balance of the debt of $132,121.65, and that the balance will be repayable upon demand made on 15 April 2019.

[4] Even though the sum in issue is within the jurisdiction of the District Court, Chris has brought his claim in this court. He says that he seeks the declarations under the court’s inherent jurisdiction, not under the Declaratory Judgments Act 1908. He sues in this court because of uncertainty as to the District Court’s jurisdiction to give such a declaration. I am not required to consider that jurisdiction question or whether declaratory relief is appropriate in this case.

[5] Chris and Arty applied for summary judgment against each other. Chris withdrew his summary judgment application. This decision is only about Arty’s summary judgment application.

[6] Arty’s case is that logging rights have been made available for Chris’s benefit. The logging rights included not only the Ohura blocks owned by the Lofts but also other logging rights available on properties known to the parties as “the Maori blocks,[1] Maxwell and Black”. Arty says that a logging company, Wild Life Properties Ltd, of which Chris is a 50% shareholder, made a profit of $399,000 and that half of that is $199,500, Chris’s share. His case is that he can take the credit for Chris having received all that profit and set it off against the debt. Moreover, he says that the value of the benefits Chris received is more than the original debt, so that

Chris has been overpaid by $39,950.35. In his counterclaim, he seeks judgment for

$39,950.35 plus interest.

[7] Different explanations have been given for the way Arty can claim credit for

the profits he attributes to Chris. First, Arty’s pleading (paragraph 6 of his statement

_{of defence) is that Northland Kauri Ltd, a logging company of which he was a}

director, transferred logging rights in the named blocks to Wild Life Properties Ltd. That was not pursued in submissions. Second, it was argued that the credit could be claimed because of a joint venture between Wild Life Properties Ltd and Northland Kauri Ltd. Third, Arty gave reply evidence that he had done some of the work on the Black, Maxwell and Maori blocks, which generated the profits.

[8] In his summary judgment application, Arty seeks judgment against Chris

both on Chris’ claim and also on his own counterclaim.

[9] During 2012 McLeod and Partners, Kerikeri lawyers, wrote to Chris asking him to sign a document forgiving the $159,000 debt on the basis that it had already been discharged. Chris’s lawyer wrote to Arty, asking Arty to clearly identify the milling rights transferred in return for the forgiveness of debt. The letter explained that until Chris received a detailed record of the milling rights he will receive, the debt will remain outstanding. The letter asked for a detailed record of the forestry milling rights. Correspondence followed between Arty and Chris’ lawyer, but the answers given by Arty did not satisfy Chris. Chris accordingly has brought this proceeding to obtain a determination before April 2019 as to the amount of Arty’s indebtedness to him.

[10] There are two relevant sets of contextual circumstances, family and selective logging.

[11] It is clear from the affidavits that Chris and Arty are not on speaking terms and have not been on speaking terms for some years. Chris and Arty are not the only Bergman siblings. Others are Fran, John, Ben, Anna, Dirk, Alan and Marc. Dirk has sworn two affidavits for Arty. John has sworn one affidavit for Chris.

[12] At one stage John, Ben and Arty were equal shareholders and directors in Northland Kauri Ltd, although Arty has been sole director and shareholder since August 2011. Northland Kauri Ltd is relevant, because that is the logging company through which Arty says that he generated the benefits for Chris. Inside Northland Kauri Ltd there have been differences between John and Ben on the one hand and Arty on the other, although Arty says that they are now resolved.

[13] Dirk and Chris were equal shareholders and directors in Wild Life Properties Ltd. They appear to have fallen out. Documents that came to light in the dispute between Arty, John and Ben have been used in this proceeding. Care is required in using documents that came to light in one dispute for the purpose of resolving differences in another dispute. The circumstances in which those documents were originally used are not given. There is no relevant contextual evidence. The fact that there have been other differences between other brothers suggests that the court should proceed with care when considering any evidence of any brother. Just because one brother has made an assertion does not mean that the court should accept it unquestioningly in this summary judgment application. Following normal practice, there has been no cross-examination.

[14] Five brothers, Chris, Arty, Ben, John and Dirk, were all involved in selective logging. Most of the logging appears to have taken place in the King Country and in Taranaki, although there are references to logging on the East Coast as well. Selective logging of native timber is regulated by Part 3A of the Forests Act 1949. The felling and milling of native timber is prohibited except in accordance with the provisions of Part 3A. That part provides for landowners to have sustainable forest management plans to authorise the harvest and milling of timber. The plans must be approved in accordance with s 67E. Under s 67M permits may be granted to authorise the harvesting and milling of timber.

[15] The Bergmans are based in the Bay of Islands. They did not own the land from which they harvested timber. Instead, they obtained licences from landowners allowing them to log native trees. The business involved negotiating agreements with landowners, working with landowners to obtain regulatory consents, including applying to the Ministry of Agriculture and Forestry for permits and approval of annual logging plans; carrying out field surveys to identify and log individual trees for harvesting; harvesting trees (including the use of a helicopter to extract the trees); and milling and selling the timber.

[16] The Bergman brothers operated three different companies – Arty, John and Ben through Northland Kauri Ltd, Chris and Dirk through Wild Life Properties Ltd. Chris says that in 2008 there was a joint venture involving Wild Life Properties Ltd

and Northland Kauri Ltd. That joint venture started when a new company called Sustainable Harvesting Ltd was formed in 2008, but Arty says that it never actively traded.

[17] By “logging rights” and “timber rights” the parties refer to the licences granted by landowners to carry out selective logging. Such rights may be traded. Chris put in evidence an agreement under which one George Houry bought Northland Kauri Ltd’s half share in a number of logging jobs.

[18] Arty exhibited to his reply affidavit a typed document headed “Rimu Blocks available to Bergman Brothers”. He does not give the basis for the document. It could be no more than self-serving. The document sets out various logging jobs in groups: “2007 Sold to WLP”, “2008”, “2008 Joint Venture” and “2010 Sold to George Houry”, with details as to location and volumes of timber. The Maori Blocks, Maxwell, Black and Lofts are the jobs under “2008”. While it is Arty’s document, Chris referred to it in submissions.

[19] For this case, Arty has made handwritten notes on the document. It now has the heading “Forestry Rights Held by each party”. He has also written beside each job “NK”, “WLP” or “both”. NK means that it was Northland Kauri Ltd’s job, WLP that it was Wild Life Properties Ltd’s job and both means just that. The Maori Blocks, Maxwell and Black are shown as WLP, the Loft blocks as NK. These jobs are not shown as part of the joint venture.

[20] Arty formulates his claim by reference to a document with the heading “Settlement of Chris’ share adjustment” dated July 2008. It sets out volumes of timber harvested from five named blocks – Maori Blocks, Maxwell, Black, Loft– Joanna and Loft–David. The recovery rate from the total volume is given as 57 per cent, said to amount to 665 cubic metres sawn. On a sale price average of $2,000 per cubic metre, the harvest is said to have earned a gross yield of $1,330,000. From that, there are deductions for costs (crosscut and milling, helicopter and landowner) at the rate of $1,400.00 per cubic metre, giving a total profit of $399,000. That is divided in half to give a half share of $199,500.

[21] Arty’s argument is that that document shows the actual harvest from the five named blocks, that this was the profit earned by Wild Life Properties Ltd and, as Chris was a 50 per cent shareholder, that Chris has benefited to the sum of $199,500. Although the document begins “It has been agreed...” the document gives no other sign that it does represent or record an actual agreement. Neither Chris nor Arty has signed it. There are no source documents to verify any of the figures given. The calculations are entirely notional; they represent what Arty considers would have been the profit to Wild Life Properties Ltd from the logging of the five named blocks.

[22] Arty says in his first affidavit that the blocks named were available to Northland Kauri Ltd. He does not explain what he means by “were available to” but in context it seems to be a claim that the rights to log these blocks were initially held by Northland Kauri Ltd, but they were made over to Wild Life Properties Ltd. He says that Chris accepted his calculations because of negotiations carried out with the assistance of his brother, John. Details of the times, dates and places of these negotiations are not given. Arty says that he gave two laminated copies of the document, “Settlement of Chris’ share adjustment”, to John in about mid-2008 and he believes that one was given to Chris. He gives no other evidence to show that Chris has agreed to or adopted the arrangements described on the document.

[23] At the same time, he has obtained an affidavit from Mr and Mrs Carter, also sawmill operators, who were engaged in harvesting native timber between 1993 between and 2008. They give general support for Arty’s calculations. Dirk also gives general corroborative evidence for Arty. He says that there was an arrangement for a joint venture, that that joint venture was for 13 blocks in the central North Island, and for which one or other of the companies had licences or permits from the various owners to harvest. He says that the five blocks in Arty’s document were recognised to be blocks made available by Northland Kauri Ltd. He was unable to vouch for the calculations, saying that kind of thing was to be left to the accountants or other professionals.

[24] Chris takes issue with Arty’s document and with the evidence used to support it. He says that he had never seen the document until he received Arty’s affidavit.

His case is that that document does not record any agreement with Arty. John’s evidence on the question of agreement also contradicts Arty’s. He says that one day Arty put a document under his nose in the yard and told him that he had overpaid Chris for his shares. John says that he did not take much notice because he had no interest in whether Arty had paid for Chris’s shares. That evidence is at odds with Arty’s claim that John acted as a go-between in negotiations.

[25] Chris says that the Maxwell, Black and Mangapapa C1 and C2 (Maori) blocks were not part of any joint venture with Northland Kauri Ltd. He says that these blocks were harvested between September and November 2007, noting that it was before the start of the joint venture. He identifies four rimu blocks that were part of the joint venture:

(a) Waikawau Farms, harvested in November 2008; (b) Bryant, harvested in November 2008;

(c) Andrew Maxwell, harvested 28 November 2008; and

(d) Max Ford, harvested in November 2008.

[26] Chris acknowledges that Arty did help with the permits and annual logging plans to get the Ministry of Agriculture and Forestry’s consent for harvesting these blocks but he says that Wild Life Properties Ltd found the blocks, funded the projects, did all the harvesting, milling, trucking and selling of the timber.

[27] As to the Mike Maxwell, Black and Mangapapa blocks referred to in Arty’s document, he produces unsworn statements by the landowners confirming that they had dealt with Chris, not with Arty, and confirming the times of harvesting. He explains that the owners live in remote places, so that it has not been possible in the time available to arrange for them to swear affidavits. While the statements are hearsay, I admit them under s 18(1)(b) of the Evidence Act 2006 as there would be undue expense and delay if they were required to give evidence by affidavit. I bear in mind that this is an interlocutory application and that the purpose of their

statements is to show that Arty’s claim that the logging rights for their properties were available to Northland Kauri Ltd is contestable and should go to an ordinary defended hearing where evidence will be tested by cross-examination.

[28] One point of weakness in Chris’ affidavit is that he states that a payment of

$30,000 by Wild Life Properties Ltd on 1 December 2008 was payment of Arty’s input into the joint venture. He has sworn a later affidavit confirming that statement is incorrect.

[29] Chris contests Dirk’s evidence that the five blocks in Chris’ document are part of the 13 blocks that were part of the joint venture. He refers to a sale of logging rights to a George Houry, where 13 blocks are listed to support his evidence. He also says that Dirk had no dealings with landowners or Ministry of Agriculture and Forestry, and that Dirk was not involved in running Wild Life Properties Ltd.

[30] In his reply affidavit, Arty says that Sustainable Harvest Ltd was inactive and was struck off the register on 27 October 2011. He asserts that the other directors of Northland Kauri Ltd – John and Ben – have gone along with allowing him to use Northland Kauri Ltd’s share of joint venture profits to pay for the transfer of the shares in Mahoe Farm Kerikeri 1978 Ltd to him. He says that the differences between him, John and Ben were resolved in 2011, meaning that he is entitled to the benefit of any joint venture profits accruing to Northland Kauri Ltd.

[31] In reply to Chris’ evidence as to the Maxwell, Black and Mangapapa blocks, he concedes that he had not claimed that Northland Kauri Ltd had the permit rights with the respective owners of those blocks. However, he contends that these blocks were included in the joint venture and they are blocks for which he provided active services towards harvest benefits. He puts in evidence his field notes, showing field work and permit administration work on the Mike Maxwell, Black, and Mangapapa blocks.

[32] Arty also draws support for his case from communications by and with accountants, a typewritten statement by John and Ben Bergman which refers to

$159,000 traded to Chris in exchange for native timber product belonging to

Northland Kauri Ltd, and a document by Chris headed “Wild Life Properties the forgotten truth” which includes the following statement:

I sold 159,000 of my personal farm shares to Arty Bergman in exchange for some of the rimu cutting rights. These blocks were returning approximately

$300,000 of timber revenue which has remained part of WLP.

[33] Before evaluating this evidence, it is timely to recall the test for a defendant’s summary judgment application. In Westpac Banking Corp v M M Kembla New Zealand Ltd[2] the Court of Appeal said:

[58] The applications for summary judgment were made under R 136(2) of the High Court Rules which permits the Court to give judgment against the plaintiff “if the defendant satisfies the Court that none of the causes of action in the plaintiff's statement of claim can succeed”.

[59] Since R 136(2) permits summary judgment only where a defendant satisfies the Court that the plaintiff cannot succeed on any of its causes of action, the procedure is not directly equivalent to the plaintiff's summary judgment provided by R 136(1).

[60] Where a claim is untenable on the pleadings as a matter of law, it will not usually be necessary to have recourse to the summary judgment procedure because a defendant can apply to strike out the claim under R 186. Rather R 136(2) permits a defendant who has a clear answer to the plaintiff which cannot be contradicted to put up the evidence which constitutes the answer so that the proceedings can be summarily dismissed. The difference between an application to strike out the claim and summary judgment is that strike-out is usually determined on the pleadings alone whereas summary judgment requires evidence. Summary judgment is a judgment between the parties on the dispute which operates as issue estoppel, whereas if a pleading is struck out as untenable as a matter of law the plaintiff is not precluded from bringing a further properly constituted claim.

[61] The defendant has the onus of proving on the balance of probabilities that the plaintiff cannot succeed. Usually summary judgment for a defendant will arise where the defendant can offer evidence which is a complete defence to the plaintiff's claim. Examples, cited in McGechan on Procedure at HR 136.09A, are where the wrong party has proceeded or where the claim is clearly met by qualified privilege.

[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. Although a legal point may be as well decided on summary judgment application as at trial if sufficiently clear (Pemberton v Chappell [1987] 1 NZLR 1), novel or developing points of law may require the context provided by trial to provide the Court with sufficient perspective.

[63] Except in clear cases, such as a claim upon a simple debt where it is reasonable to expect proof to be immediately available, it will not be appropriate to decide by summary procedure the sufficiency of the proof of the plaintiff's claim. That would permit a defendant, perhaps more in possession of the facts than the plaintiff (as is not uncommon where a plaintiff is the victim of deceit), to force on the plaintiff's case prematurely before completion of discovery or other interlocutory steps and before the plaintiff's evidence can reasonably be assembled.

[64] The defendant bears the onus of satisfying the Court that none of the claims can succeed. It is not necessary for the plaintiff to put up evidence at all although, if the defendant supplies evidence which would satisfy the Court that the claim cannot succeed, a plaintiff will usually have to respond with credible evidence of its own. Even then it is perhaps unhelpful to describe the effect as one where an onus is transferred. At the end of the day, the Court must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment made by the Court on interlocutory application is not one to be arrived at on a fine balance of the available evidence, such as is appropriate at trial.

[34] In Attorney-General v Jones,[3] the Privy Council commented:

It cannot be doubted that, properly used, R 136(2) can save both time and cost by permitting claims with no hope of success to be summarily dismissed at an early stage. But rarely if ever will the procedure be appropriate where the outcome of the action may depend on disputed issues of fact, and reliance on the rule in an inappropriate case may serve to increase both the length and the cost of the proceedings.

[35] Under this test for a defendant’s summary judgment application, there are a number of areas where Arty’s application is in difficulty.

Was there an agreement to vary or waive the original acknowledgement of debt?

[36] Arty Bergman’s acknowledgement of debt provides that Chris may demand

_{payment in timber in part or in full satisfaction of the debt at a value to be agreed}

between them then. That operates at the time when demand may be made – that is, no earlier than 15 April 2019. Arty is relying on an arrangement made before 2019. Although the acknowledgement of debt entitles him to wait until April 2019 before paying, he says that he has already discharged the debt by the arrangement he relies on in his defence. It is, of course, open to the parties to enter into an agreement that varies or discharges their existing arrangements. Further, they might make arrangements that give rise to a waiver of contractual rights or an estoppel. Arty’s case is that he and Chris did enter into some arrangement of that sort. However, the evidence is not clear that they made any such arrangement. Arty’s case turns on his document “Settlement of Chris’ share adjustment” but even his own evidence does not show unequivocally that Chris agreed to it and adopted it. There is nothing certain, such as a written document signed by Chris. Instead he relies on negotiations through a go-between without describing those negotiations or showing that Chris actually assented to Arty’s proposals. Both John, the alleged go-between, and Chris deny that Arty’s document represents any sort of agreement or understanding as to discharge of Arty’s debt. Their denials cannot be dismissed out of hand. At a defended hearing their evidence may be accepted. Arty has not shown that it cannot be.

Did Arty confer incontrovertible benefits on Chris?

[37] Arty’s case may be that it is not necessary to rely on any specific understanding or agreement with Chris, because Chris cannot dispute that he did receive actual benefits from Arty. Chris appears to concede part of that claim through his acknowledgement that Northland Kauri Ltd originally owned the rights to the Loft blocks and that Wild Life Properties Ltd received the benefits of those rights when they were sold to George Houry. Leaving aside whether such a claim is available at law, there are other difficulties. Arty cannot rely on the transfer of logging rights, because Chris has given plausible evidence, apparently accepted by Arty, that Wild Life Properties Ltd owned the rights for the Maxwell, Black and Mangapapa blocks. Further Arty accepts that Wild Life Properties Ltd, not Northland Kauri Ltd, did most of the work in exploiting those rights. Arty’s claim seems to be based on his contribution through field surveys and obtaining regulatory approvals. However he puts the value of that benefit as the entire profit he says was

generated from five blocks. He gives no reason why the value of his contributions should be set so high as to cut out any return to Wild Life Properties Ltd for risk and its own contributions of labour and capital to the profits. There is no evidence as to an objective measure of the value of Arty’s services on the Maxwell, Black and Mangapapa blocks. Any claim to have conferred incontrovertible benefits remains contestable.

Does Arty have a claim arising out of a joint venture?

[38] In his reply affidavit, Arty says that he is entitled to profits on the Maxwell, Black and Mangapapa blocks because they were part of a joint venture between Northland Kauri Ltd and Wild Life Properties Ltd. That claim is also contestable. Arty’s document, “Rimu Blocks available to Bergman Brothers”, shows that these blocks were not part of a joint venture. Even if they were part of a joint venture, it is not clear why Arty is able to claim credit for all the profits. Presumably under a joint venture between two equal partners, each would share profits equally, so that Wild Life Properties Ltd could claim half the gains in its own right. It is only the other half share that Arty could claim as a credit to reducing his debt to Chris. No accounts for the joint venture are in evidence. At this stage it is not possible to see how Arty could have a claim based on a joint venture, on the basis of the current evidence.

[39] Part of Arty’s case is that he is entitled to claim the benefit of anything contributed by Northland Kauri Ltd. His evidence is that he has resolved all issues with John and Ben, so that the court should have no concerns as to his entitlement. That is only an assertion at this stage. Arty has not put in any evidence to show that the court can put to one side the involvement of John and Ben in Northland Kauri Ltd.

Can Arty’s calculations be accepted?

[40] Arty’s calculations in his document “Settlement of Chris’ share adjustment” are notional. They are not based on any source documents. They reflect his assessment of likely profits earned. No doubt Arty has not had discovery of the

records of Wild Life Properties Ltd so as to prepare a calculation based on source documents. Even if all else were to go Arty’s way, it would not be safe to rely solely on notional calculations in a summary judgment application, even if others in the industry were to vouch for them. I cannot help thinking that a qualified accountant might well suggest adjustments for tax, depreciation, overheads and the like, even if Arty is vindicated on the figures he has used.

When did the parties sign the acknowledgement of debt?

[41] The acknowledgement of debt has the date 26 April 2009. It provides for payment in ten years’ time. The matters that Arty relies on to say that the debt is cleared all happened before he and Chris signed the acknowledgement of debt. He relies on events in 2007 and 2008. The date of the acknowledgement creates a difficulty for Arty, because if the debt had already been paid off by timber rights made available before the acknowledgement was signed, the parties did not have to go to the trouble of recording arrangements for payment in ten years’ time. The text of the acknowledgement is consistent with the acknowledgement having been signed on or after the transfer of shares – the parties could not have recorded that the debt had arisen before the event. Notwithstanding that, Arty alleges that the date of the acknowledgement is in error. However he offers no evidence to support that.

Evidence after the events

[42] So far this decision has considered the evidence directed to the events in issue. On that evidence, Arty has not made out a case for summary judgment. He also relies on evidence after the events. However, that additional evidence does not fill the gaps in his case.

[43] Arty’s case places some store on communications with accountants. On

22 December 2012 BDO Bay of Islands Ltd wrote to Whitelaw Webber Ltd regarding Northland Kauri Ltd. That letter records certain understandings of the accountant. One was as to the agreement for $159,549 as the value of Chris’ shares transferred to Arty in Mahoe Farm Kerikeri 1978 Ltd. Another is that to satisfy this Northland Kauri Ltd sold timber to Wild Life Properties Ltd for $159,549. The

accountant notes that no GST was raised but that Northland Kauri Ltd had a GST liability on this amount. I understand that BDO Bay of Islands Ltd was the accountant for Northland Kauri Ltd and Arty. Whitelaw Webber Ltd was the accountant for Wild Life Properties Ltd. The letter is consistent with an accountant trying to establish what has happened and to ascertain the correct way to treat it in an accounting sense. It does not bind Chris and is not determinative.

[44] Arty relied on an extract from the financial statements for Wild Life Properties Ltd for the year ending 31 March 2008. That shows an entry for “Chris Bergman” of “funds introduced $160,265”. Arty suggested that included in this sum is $159,549 payable under the share transfer agreement. There is nothing in this extract from the financial statements to suggest that this is necessarily so.

[45] An exchange of emails between Dirk and the accountants regarding the current account entry was also put in evidence. However, it is also equivocal whether the entry in the shareholders’ accounts relates to Arty paying off his debt to Chris.

[46] Arty referred to a letter that John and Ben wrote to BDO Bay of Islands Ltd under the heading “Sawmills New Zealand Ltd” in respect of the financial statements for Northland Kauri Ltd for 2010. It raises a large number of issues about the correctness of the financial statements. That includes this:

159,000 traded to Chris Bergman for shares in the Mahoe Farm in exchange for native timber product belonging to NK. Steven has the paperwork for this. What has been done about it?

[47] There is no evidence that John and Ben were writing on behalf of Chris. The document does not bind him. It may indicate a belief by others that Arty has discharged his liability to Chris. It is not an acknowledgement of that by Chris.

[48] Closer to the point is a document prepared by Chris under the heading “Wild Life Properties the forgotten truth” put in evidence by Dirk. This contains the statement under the heading “Capital I have introduced into WLP”:

I sold 159,000 of my personal farm share to Arty Bergman in exchange for some of the rimu cutting rights. These blocks returned me approximately

$300,000 in timber revenue, which has remained part of WLP.

[49] That is, admittedly, evidence against Chris, but Mr Mark argued that it can be explained away on the basis of a misunderstanding on the part of Chris. At this stage it is evidence against Chris, but it is not conclusive.

Outcome

[50] The additional evidence does not fill the gaps in Arty’s defence. Arty’s application falls a long way short of showing a watertight defence to Chris’s claim. Summary judgment is appropriate when it can be said that no useful purpose would be served by requiring the case to go to a full hearing after going through all the interlocutory procedures, because the answer is clear-cut already. However, that is not this case. At this stage, before he has obtained discovery, Arty’s case is piecemeal and patchwork. It may be that after a full hearing, when witnesses on both sides have been fully cross-examined and when all the documentary record has become available, Arty may be able to make out his case that he has discharged his debt to Chris. However, faced with so much factual uncertainty, gaps in Arty’s case and factual differences between the parties, I cannot make that finding on this summary judgment application.

[51] I take the same approach with Arty’s application for summary judgment. To succeed on his application for summary judgment on his counterclaim, Arty has to make out the grounds for his defence, and in addition show that he has overpaid Chris. I have already found that he has not made out his defence. Even if I had found that, I would still have doubts as to his counterclaim. That is because I am by no means satisfied that his calculation on the sheet “Settlement of Chris’ share adjustment” can be treated as conclusively correct, given the absence of source documents to support it.

[52] I make these orders:

(a) I dismiss both of Arty’s applications for summary judgment;

(b) I make no costs order at present but reserve the right to the parties to seek costs by memoranda, if costs are sought; and

(c) I direct the Registrar to allocate a further case management conference for further directions to be given. Before the conference, counsel should confer as to the scope of discovery, the need for interlocutory applications, mode of evidence and trial directions. It would also be helpful if they could narrow the issues.

................................................. Associate Judge R M Bell

---

[1] The Maori blocks are also referred to as the Mangapapa blocks.

[2] Westpac Banking Corp v MM Kembla New Zealand Ltd [2001] 2 NZLR 298 (Companies Act)

at [58]-[64].

[3] Attorney-General v Jones [2003] UKPC 48; [2004] 1 NZLR 433 at 439.