Bannock v Monaco Management Limited [2016] NZHC 2023 (29 August 2016)

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BETWEEN	MICHAEL WILLIAM BANNOCK AND ANNE MARGARET BANNOCK AND OXFORD STREET TRUSTEES (2010) LIMITED AND THE OTHER PLAINTIFFS LISTED IN SCHEDULE 1 TO THE STATEMENT OF CLAIM Plaintiffs
AND	MONACO MANAGEMENT LIMITED First Defendant
AND	MONACO VILLAGE LIMITED (IN LIQUIDATION AND RECEIVERSHIP) Second Defendant
AND	SCOTT PATRICK SANDERS Third Defendant

Hearing:	29 August 2016
Appearances:	P G Skelton QC and S M Thompson for Plaintiffs Q M Hay and A D Marsh for First and Third Defendants
_Judgment:	_{29 August 2016}

[1] This is an application by the plaintiffs to amend their pleadings after the close of pleadings by filing a further amended reply to the first and third defendants’ third amended statement of defence.

[2] In a telephone conference on 10 August, I granted leave to amend the plaintiffs’ pleadings in only one regard and that was to incorporate further particulars of allegations of Land Transfer Act fraud against the third defendant. The first and

_{third defendants’ understanding at that point was that the
particulars were as set out}

in the memorandum filed prior to that telephone conference and it did not object to those particulars being added to the pleadings. However, the draft amended reply circulated on 23 August had a number of amendments which were not anticipated by my ruling. The defendants object to the proposed amendments.

(a) drastically recast their fraud allegations, seeming to abandon those previously relied on and to raise new allegations;

(b) change their defence in relation to those who previously had leases registered against their titles; and

[4] The defendants say that this will inevitably lead to prejudice to the first and third defendants who have prepared all their evidence and submissions on the basis previously communicated by the plaintiffs.

[5] The issue is whether I should at this late stage, and on the brink of the hearing, allow these amendments.

[6] The High Court Rules require leave to be granted before pleadings can be amended after the close of pleading.¹It is clear that leave can be granted despite the proximity to trial. The relevant test is as was cited in the Court of Appeal decision Elders Pastoral Ltd v Marr:²

The general approach therefore, is that even at this late stage the Court should make the amendments sought if they are necessary for the purpose of determining the real controversy between the parties, but even if that may appear to be so, the application should still be declined if making it at this stage, is likely to result in an injustice to one or more of the defendants.

[7] The first issue relates to the amendment proposed to paragraph 15 of the pleadings. In that regard the plaintiffs wish to deny that the first defendant is the

registered proprietor of a leasehold estate in 12 units owned by various plaintiffs. The amendment seeks to update the pleadings as a result of recent title searches which have revealed that the term of the lease of those units has expired and new leases have not been registered. The plaintiffs say that no prejudice arises from this amendment as the first defendant has the onus to prove it is the registered proprietor of the relevant leasehold estate in order to be able to advance its Land Transfer Act affirmative defences.

[8] The defendants say that there is potential prejudice. It now needs to recast the evidence of Mr Sanders to address the circumstances in which those leases were not reregistered. Mr Marsh advises that that could take up to a week to review and provide the appropriate evidence in response. It is very much a last minute change and he refers to the cost that would be involved in doing that.

[9] In my view, this is a form of updating evidence and normally leave should be granted to permit such amendments to the pleadings. It is unrealistic, in my view, to ignore the reality of the situation. If more time is required to recast Mr Sanders’ evidence in that regard, then that, however, does need to be afforded. I would like to think that a week would not be required as it is simply recasting Mr Sanders’ evidence. For this reason, I will allow that amendment, though I will confer with counsel afterwards as to when to adjourn the hearing to allow time to do that and to determine how long an appropriate adjournment needs to be.

[10] The second issue relates to amendments to the pleadings which propose, in the plaintiffs’ view, to clarify that the s 37(4) claim is an in personam claim, so the indefeasibility provisions of the Land Transfer Act are not engaged.

[11] Counsel for the plaintiffs considers that the categorisation of a s 37(4) claim a in personam or otherwise, is a matter of law and did not need to be pleaded, but they nevertheless pleaded it in order to ensure that the defendants and the Court are fully and fairly informed of the basis of their response to the defendants’ affirmative Land Transfer Act defences.

[12] They also point out that the fraud exceptions to the Land Transfer Act defences have been re-pleaded in their paragraphs 16 and 19 and they say that they have narrowed the scope of their pleading. Previously the plaintiffs were claiming that all the leases were registered fraudulently. However, in the draft amended reply, it is pleaded that only leases and renewals registered after these proceedings commenced were registered fraudulently, and they say there can be no prejudice to the defendants from the reduced scope of this fraud pleading.

[13] The defendants, however, say that the plaintiffs’ claim was clearly pleaded in rem only, and the defendants’ opening submissions relied on the fact that there was no in personam claim. Now the plaintiffs are recasting their claim because it is clear that many of the plaintiffs have no relationship with the existing defendants. They are now seeking to create this by focusing on circumstances at renewal of the lease, rather than at initial registration. It is therefore a new claim which is not adequately particularised and, again, if they were to respond to it, they would need to recast their evidence.

[14] I accept that the plaintiffs did not clearly raise the fact that they were advancing an in personam claim in their pleadings. However, I believe this is a case where the amendment should be allowed as it is necessary to ensure that the real controversy goes to trial so as to secure the just determination of the proceedings.

[15] Again, I consider that any prejudice arising out of this re-pleading can be accommodated by giving the defendants time to recast their evidence in response. That is a practical issue which again I will discuss with counsel at the conclusion of this ruling.

[16] Finally, there is the issue of the relief sought in the revised pleading where it is now clarified that the relief sought includes orders against Monaco Management Limited (MML) that MML discharges the Heartland Mortgages and surrender the lease.

[17] I accept that the plaintiffs’ pleadings encompassed any relief that the Court thinks appropriate and it was proper for them to clarify the precise relief sought. For this reason, I am satisfied that that amendment, too, should be allowed.

[18] However, as a consequence of allowing these amendments to the pleadings, I have already signalled that an adjournment will need to be granted at some stage in the proceedings to allow the defendants’ time to recast their evidence to respond. I also think, given this is a form of indulgence to the plaintiffs and it will place a further cost burden on the defendants to spend the time recasting their evidence, that there should be a costs award against the plaintiffs. I will reserve that issue for now, but will allow the defendants to be heard on that issue in due course.

(b) the hearing will reconvene at 2.15 pm on Thursday, 1 September 2016 to deal with:

High Court of New Zealand Decisions

Bannock v Monaco Management Limited [2016] NZHC 2023 (29 August 2016)