Arranmore Developments Ltd v Narayan HC Auckland CIV 2009-404-5439
[2010] NZHC 2137
•11 October 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2009-404-005439
AND BETWEEN ARRANMORE DEVELOPMENTS LTD Plaintiff
ANDSHANE ANJAY NARAYAN Defendant
Hearing: 5 October 2010
Appearances: M J Fisher for Plaintiff
S Grant for Defendant
Judgment: 11 October 2010 at 3:00 pm
JUDGMENT OF ASSOCIATE JUDGE BELL
This judgment was delivered by me on 11 October 2010 at 3:00 pm pursuant to Rule 11.5 of the High Court Rules. Registrar/Deputy Registrar
Date: ………………….
Solicitors/Counsel:
Daniel Overton & Goulding (D Daniel), PO Box 13017, Onehunga, Auckland
Brennan & Brown-Haysom (G Brown-Haysom), PO Box 200-025, Manukau
M Fisher, PO Box 3236, Shortland Street, Auckland
S Grant, PO Box 4338, Auckland
ARRANMORE DEVELOPMENTS LTD V S A NARAYAN HC AK CIV-2009-404-005439 11 October 2010
[1] The plaintiff has applied for this proceeding to be transferred to the District
Court. The application is made under s 46 of the District Courts Act 1947:
46 Transfer of proceeding from High Court to District Court
(1) If, where a proceeding has been commenced in the High Court,—
(a)An agreement is made under the provisions of section 37 of this Act that a District Court shall have jurisdiction; or
(b) The subject-matter of the proceeding is within the jurisdiction of District
Courts,—
the High Court or a Judge of that Court may, on the application of any party to the proceeding, order that the proceeding be transferred to a District Court.
(2) Where the subject-matter of a proceeding that has been commenced in the High Court is within the jurisdiction of District Courts, the High Court or a Judge of that Court may, of its or the Judge's own motion, order that the proceeding be transferred to a District Court unless, in the opinion of the High Court or the Judge, some important question of law or fact is likely to arise in the proceeding.
[2] In my decision of 15 June 2010 at [46], I indicated that I had no jurisdiction to decide such an application, in the absence of a consent by the parties. That was mistaken. An application for transfer is heard in chambers. An associate judge has the jurisdiction and powers of a judge in chambers – r 2.1(1) High Court Rules. Accordingly, I am able to consider the application, even though it is opposed.
[3] The substantive proceeding is a claim for specific performance of an agreement dated 15 December 2007 for the sale of lot 44 in the plaintiff’s subdivision at Flat Bush School Road to the defendant for a price of $299,000. The plaintiff is assignee of the agreement for sale and purchase. The plaintiff applied for summary judgment. The defendant opposed. The defendant raised a number of defences largely based on allegations of misrepresentation by the vendor’s sales agent.
[4] In my judgment of 19 May 2010, I rejected most of the allegations of misrepresentation, but held that one alleged representation, as to the date of start of construction of the town centre at Flat Bush, was arguable. I found that the defendant’s loss could be no greater than $26,500. I held: that the purchaser could not cancel under the Contractual Remedies Act because the alleged
misrepresentation did not meet the standards of essentiality or substantiality under s 7(4); that, if the defendant made out the claim for misleading or deceptive conduct under the Fair Trading Act, the Court would not declare the contract void under s
43(2)(a) of the Fair Trading Act 1986; that the Court could not make an order under s 43(2)(d) for the payment of money because the plaintiff, as assignee to the agreement for sale and purchase, was not itself a party to the alleged misleading or deceptive conduct; and that the defendant had an arguable defence of equitable set- off for the misrepresentation.
[5] I gave a supplementary judgment on 15 June 2010 addressing the terms of orders for specific performance and costs. I issued a further minute on 29 June 2010 addressing slips in my judgment of 15 June 2010.
[6] I have been advised that, since then, the defendant has complied with the order for specific performance, has provided security for the sum of $26,500, and has taken title to lot 44. The defendant appealed against the judgments at 19 May 2010 and 15 June 2010.
[7] The matters remaining for decision are relatively confined. The defendant will have to prove the misrepresentation he alleges and that it induced him to enter into the contract. If he establishes the misrepresentation, the Court will also need to determine what loss, if any, he has suffered.
[8] Under the Contractual Remedies Act, the inquiry as to the defendant’s loss will be the contractual measure of damages – s 6(1)(d) of the Contractual Remedies Act.
[9] The question of equitable set-off for misrepresentation will no longer be a live issue. The effect of my judgment of 19 May 2010 requiring a sum to be set aside pending the hearing of the claim is to uphold equitable set-off for that sum. There would be no point for the plaintiff to continue to argue that, even if the defendant can establish misrepresentation, the defendant is still not entitled to equitable set-off. That argument would achieve nothing because the recognition of misrepresentation causing loss would result in an immediate judgment against the
plaintiff for the amount of the defendant’s loss and that judgment would be applied against the plaintiff’s rights to require specific performance by payment.
[10] There are also the defendant’s arguments under the Fair Trading Act. The defendant cannot claim a sum of money from the plaintiff under s 43(2)(d) because this plaintiff is not a party to any misleading or deceptive conduct. The defendant cannot seek an order declaring the contract void, because that matter has already been determined against him in my judgment of 19 May 2010. There still remains a possible argument for the defendant for an order varying the contract under s 43(2)(b). However, I can see no basis on which the Court would make an order varying the contract to a greater extent than the range of any damages award the Court may make in the defendant’s favour under the Contractual Remedies Act. I also note that the defendant is unlikely to be able to argue for any relief based on a tortious measure of loss, because the evidence pointed to the sale price of the properties being at current market value.
[11] Essentially, the case is now an argument over the sum of $26,500, plus interest. The plaintiff is claiming that sum as the balance payable under the contract and the defendant is saying that he has suffered a loss up to that amount.
[12] The defendant opposes the transfer to the District Court.
[13] The defendant says that the case does not come within the District Courts equitable jurisdiction under s 34 of the District Courts Act:
34 Equity jurisdiction
(1) Subject to the provisions of this Act, the Courts shall have—
(a)The same equitable jurisdiction as the High Court to hear and determine any proceeding (other than a proceeding in which the amount claimed or the value of the property claimed or in issue is more than $200,000):
(b)Jurisdiction to hear and determine any proceeding for the dissolution or winding up of any partnership (whether or not the existence of the partnership is in dispute), where the whole assets of the partnership do not exceed in amount or value the sum of $200,000.
[14] The words in brackets in s 34(1)(a) allow the District Court to hear a claim in equity where the amount claimed or in issue is less than $200,000. The plaintiff’s
claim for specific performance is now a claim for the balance of the unpaid purchase price - $26,500, plus interest. That is less than $200,000 and is within the equitable jurisdiction of the District Court under s 34(1)(a).
[15] The defendant says that the District Court does not have jurisdiction to consider the defences under the Fair Trading Act. The defendant refers to the limitations on the District Court’s jurisdiction under s 43(3) of that Act. As indicated above, the defendant has a potential claim under s 43(2)(b) for variation of the contract. Under s 43(3)(b), the District Court shall not make an order under subsection (2)(b) in any case where the value of the consideration for the promise or act of any party to the contract arrangement exceeds $200,000.
[16] The defendant says that the consideration in this case is $299,000 and that prevents the District Court hearing in the defendant’s claim for variation under s 43(2)(b) of the Fair Trading Act.
[17] To that point, the defendant’s argument is sound. However, the defendant’s arguments under the Fair Trading Act add nothing to the defendant’s defences based on misrepresentation under the Contractual Remedies Act. If the defendant does not make out misrepresentation under the Contractual Remedies Act, then he will also not be able to make out misleading and deceptive conduct under the Fair Trading Act and any monetary relief given for the misrepresentation will be as extensive as any order that might be made under s 43(2)(b) of the Fair Trading Act varying the contract. Effectively, the defendant loses nothing by the remaining issues being heard in the District Court.
[18] The defendant says that it is desirable to have the same court decide disputes between the same parties on the same subject matter to avoid conflicting decisions. In my decisions on the summary judgment application, I have decided which parts of the plaintiff’s claim the defendant does not have a defence to and have recognised that some parts of the defendant’s case are arguable. A later judgment on the outstanding issues, going either in favour of the plaintiff or in favour of the defendant, would not be inconsistent with the decisions I have made on the summary judgment application. There can be no risk of inconsistent decisions.
[19] There is also a larger point to be made here. In this Court, a plaintiff may apply for summary judgment at the start of a proceeding. Under the current District Court rules, a plaintiff cannot seek summary judgment immediately. Some litigants are applying to this Court for summary judgment, though the relief they seek is within the jurisdiction of the District Court. Where this Court finds for defendants on these summary judgment applications, it should be open to this Court to transfer the proceeding to the District Court for determination of the matters in issue. Arguments such as those raised by the defendant in this case ought not to stand in the way of this Court transferring to the District Court cases within that Court’s jurisdiction.
[20] The defendant says that there are important or novel legal questions in this case:
a) Whether the Court’s powers under s 43(2)(a) and (b) of the Fair
Trading Act may be used against an assignee;
b)Whether a claim for misrepresentation gives rise to a right of equitable set-off in New Zealand;
c) Whether the fact that that High Court has made an order for specific performance imposes any constraint on a trial judge, or whether the trial judge is free to decide that specific performance is not appropriate as the equitable set-off is so great that the defendant’s cancellation was justified.
[21] I have discussed the first two questions already. The Fair Trading Act questions do not require determination because the matters in issue between the parties can be effectively decided under the Contractual Remedies Act. The equitable set-off point will not be a live issue before the Court that hears this case.
[22] The third point attempts to revisit matters that have already been decided in my decision of 19 May 2010 and will not arise at a later hearing.
[23] Given the small sums in issue between the parties, it is more efficient for this case to be transferred to the District Court. The District Court Rules allow for short trials and simplified trials, which will save on time and costs. Those economies are not available in this Court.
[24] Accordingly, I am satisfied that this is an appropriate case for the proceeding to be transferred to the District Court.
[25] The proceeding is transferred to the District Court at Manukau, as the Court nearest to the place of residence of the defendant: r 3.1 of the District Courts Rules.
[26] The defendant has also appealed against my decision of 19 May 2010. The defendant says that this proceeding should be stayed pending the decision of the Court of Appeal. There is no application for stay pending the appeal. The District Court can decide whether the hearing of the outstanding issues should be put off until the result of the defendant’s appeal is known.
[27] Accordingly, the proceeding is transferred to the District Court at Manukau. The plaintiff is entitled to costs on the application on a 2B basis.
R M Bell
Associate Judge
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