Smith v Noble Investments Limited (in liquidation) [2018] NZHC 2294 (31 August 2018)

Last Updated: 18 September 2018

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2014-409-000549 [2018] NZHC 2294

BETWEEN	GREGORY ROBERT SMITH and COLIN PETER STOKES Plaintiffs and First Counterclaim Defendants
AND	NOBLE INVESTMENTS LIMITED (in liq) First Defendant and Counterclaim Plaintiff
AND	APPLE FIELDS LIMITED (removed from Register) Second Defendant and Counterclaim Plaintiff
AND	JUSTIN WILLIAM PRAIN Third Defendant
AND	CARDNO (NZ) LIMITED Fourth Defendant
AND	SHAYNE PHILPOTT, NEW ZEALAND TRUSTEE SERVICES LIMITED, FAY EUNICE RICHARDSON and BURNSIDE TRUSTEES LIMITED Second Counterclaim Defendants
AND	STUART ELLESMERE LINDSAY and JULIE IVONEE LINDSAY Third Counterclaim Defendants

Hearing:	2 August 2018
Appearances:	C P Stokes (second-named Plaintiff) in person No other appearances
Judgment:	31 August 2018

GREGORY ROBERT SMITH and COLIN PETER STOKES v NOBLE INVESTMENTS LIMITED (in liq) [2018] NZHC 2294 [31 August 2018]

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

Joinder

Introduction

[1] The first plaintiff applies for an order pursuant to r 4.56(1)(b) High Court Rules adding four persons as defendants in this proceeding.

[2] The second plaintiff consents to the making of the orders.

[3] The first defendant is in liquidation. The claims against the defendant are stayed for the time being.¹ It is taking no part in this proceeding at present. The second defendant, having been in liquidation, appears to have been removed from the Register of Companies on 18 July 2018.

[4] Counsel for the third defendant has recorded that the third defendant does not oppose the joinder.

[5] The fourth defendant has not filed any opposition and has not otherwise recorded its position on the application.

[6] The counterclaim defendants were joined by the first and second defendants (as counterclaim plaintiffs). They are not taking an active part in the proceeding while the plaintiffs’ claims against the first and second defendants remained stayed.

Joinder – the principles

[7] Rule 4.56 permits a Judge to add a person as defendant where the person’s presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.

¹ Pursuant to s 248(1)(c)(i) Companies Act 1993.

[8] A broad discretion is involved. It is not a requirement of the Rule that the Court be persuaded that the presence of the person in question will be necessary – the rule simply requires that the presence may be required.

[9] It has been consistently recognised that the current approach in New Zealand to joinder is liberal.² This especially applies to joinder of defendants by plaintiffs.³

The basis of the first plaintiff’s application

[10] The first defendant was the original registered proprietor of land at Yaldhurst Road, Christchurch which was to be the subject of a subdivision. The second defendant held the management contract for the subdivision. Mr Stokes and others purchased lots in the subdivision but have had to resort to the Court repeatedly to protect or enforce their interests since.

[11] The plaintiffs pursued claims against both the first and second defendant in this proceeding, commenced in August 2014, for breach of contract. They sought orders for specific performance of the contract they had with Noble and damages against both defendants.

[12] Subsequently, the remaining land in the subdivision was sold by a mortgagee, rendering otiose the application for specific performance of the contract. The plaintiffs through a series of amended pleadings pursued a number of causes of action against the original two defendants together with the third defendant (Justin Prain) and the fourth defendant (Cardno (NZ) Ltd). As well as continuing to sue the first and second defendants for breach of contract, the plaintiffs sued them for misrepresentation in relation to subdivision and sued Mr Prain (as the former “spokesman for the first and second defendant”) on the basis that he knowingly or recklessly made false representations as to the subdivision.

[13] Against that background, Mr Stokes has identified four persons whom he seeks to have joined to this proceeding as defendants.

2. See, for instance, Chan v The Seyip Association of New Zealand [2007] NZHC 1099; [2008] NZAR 37, at [12] – [13] and the cases there cited.

³ Sellman v Slater [2016] NZHC 2415.

(a) Justin William Prain – the joinder of Mr Prain has defendant is unnecessary. He has previously been joined as a defendant.

It appears from Mr Stokes’ application that Mr Stokes wishes to sue Mr Prain additionally in relation to a different or further role which he had in the subdivision. Such an expansion of the claims against Mr Prain does not require joinder. Until the close of pleadings, Mr Stokes is entitled to amend his claim against Mr Prain.

(b) New Zealand Trust Nominees Ltd – Mr Stokes identifies New Zealand Trust Nominees Ltd (NZ Trust) as having been the sole shareholder of the first defendant (now in liquidation). (Gordon Ralph Stewart, to whom I return below at [c]) has been the sole director and sole shareholder of both NZ Trust and the first defendant. Mr Stokes characterises Mr Stewart as the only real mind of each company and the person who orchestrated the enticement and deceit which the plaintiffs assert.

Mr Stokes intends to invoke the provisions of ss 271 – 272 Companies Act 1993 to ask the Court to order that there be a pooling of assets of the first defendant and NZ Trust as related companies.

The intended allegation of responsibility for the first defendant’s actions is a sufficient basis for joinder. Any added defendant will have its right upon service to apply, if it considers the grounds exist, for orders striking out the claim against it or for defendant’s summary judgment.

(c) Gordon Ralph Stewart – the relationship between Mr Stewart, NZ Trust and the first defendant is identified above.

Mr Stokes’ intended allegations of the responsibility for misrepresentations applies to Mr Stewart as it does to NZ Trust.
It is accordingly appropriate that he be joined.

(d) Mark Joseph Schroeder – Mark Joseph Schroeder is identified by Mr Stokes as having been a director of the second defendant. Mr Stokes intends to plead that the second defendant planned and orchestrated with Mr Stewart the passing of the remaining subdivision property to others with an intention to defeat the plaintiffs’ caveats and to dispossess them of their interests. It is to be put that Mr Schroeder was a party to the deceit.

As a parallel to the joinder of NZ Trust and Mr Stewart, it is appropriate to join Mr Schroeder as a defendant.

Further amended statement of claim

[14] The last amended statement of claim filed by the plaintiffs was a fourth amended statement of claim dated 29 July 2016. At that point, the plaintiffs had legal representation. That pleading was in an acceptable form.

[15] Subsequently, the plaintiffs (in anticipation of Mr Stokes’ making this application for joinder), filed a “fifth amended statement of claim”. In the document the plaintiffs reworked the numbering of the defendants in a way which makes the document difficult to follow. It did not clearly plead the matters against each intended defendant which need to be pleaded in order to satisfactorily reflect and plead the basis upon which each of the added defendants is alleged to have been involved in the matters giving rise to the respective causes of action.

[16] To maintain consistency with previous pleadings, I direct that the numbering of the defendants be as set out in the heading to this Minute but with the added defendants added (after the fourth defendant) as:

New Zealand Trust Nominees Ltd Fifth Defendant

Gordon Ralph Stewart Sixth Defendant
Mark Joseph Schroeder Seventh Defendant

(with the counterclaim defendants to then follow).

Orders

[17] I order:

(a) The following persons are added as defendants:

(i) New Zealand Trust Nominees Ltd (as fifth defendant);

(ii) Gordon Ralph Stewart (as sixth defendant);

(iii) Mark Joseph Schroeder (as seventh defendant).

(b) Given the first plaintiff has been self-represented, there is no order as to costs. The disbursements of the application are reserved.

(c) Within 20 working days, the plaintiffs are to file and serve upon the existing parties a fifth amended statement of claim incorporating the additional or amended causes of action against the added defendants.

(d) Within 10 working days thereafter, the plaintiffs are to serve the newly joined parties with the amended statement of claim, a copy of the notice of proceeding, a list of all documents that have been served by any of the parties upon one another, and a letter setting out the plaintiffs’ proposals for dealing with any matters of discovery and inspection as between the plaintiffs and the newly-joined parties.

Associate Judge Osborne

Solicitors:

K J McMenamin & Sons, Christchurch

Morrison Kent Lawyers, Wellington & Auckland Copy to:

Plaintiffs (including C P Stokes) self-represented Second Counterclaim Defendant self-represented