Carr v Humphries
[2012] NZHC 913
•4 May 2012
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2006-412-000513 [2012] NZHC 913
BETWEEN EWAN ROBERT CARR Plaintiff
ANDRODNEY JOHN HUMPHRIES Defendant
Hearing: (Determined on memoranda filed) (Heard at Dunedin)
Appearances: J E Bayley for Plaintiff
A R Gilchrist for Defendant
Judgment: 4 May 2012
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
as to interest on completion of contract to be specifically performed
Background
[1] This is an application by Mr Carr, as judgment creditor, for further directions in relation to the execution and implementation of a summary judgment.
[2] The parties have been in litigation for close to six years.
[3] In the first year, on 16 November 2006, the plaintiff was awarded summary judgment. The Court ordered:
(1)That the defendant do perform his obligations arising under the Deed of Assignment between the parties by:
(a) Procuring that Awataierei Holdings Ltd forthwith provide the plaintiff with a statement of the amount (calculated strictly in
CARR V HUMPHRIES HC DUN CIV-2006-412-000513 [4 May 2012]
accordance with clause 1.2(a) of the Deed of Assignment of Loan) which is payable in respect of the transfer of the shares in Brookside Properties Ltd to the plaintiff as at 30 November 2006;
(b) Procuring the release by 30 November 2006 of any and all existing securities over the shares in Brookside Properties Ltd, and over the assets of that company;
(c) Procuring the transfer of the plaintiff on 30 November 2006 of the shares in Brookside Properties Ltd in consideration for the plaintiff’s payment to Awataieri Holdings Ltd of the amount required to settle.
(2) Costs of $21,520.00 on a 2C basis in accordance with the attached
Schedule 1.
(3) Disbursements of $1,572.75 in accordance with the attached Schedule
2.
(4) That the Registrar of the Court at Dunedin may execute any documents required to give effect to this order in the event the defendant fails to do so.
(5) That leave is reserved to the plaintiff to further apply, should any matters relating to execution or implementation of these orders arise.
[4] I will refer to the deed of the assignment of loan as “the deed”. The order was in part made to give effect to the provisions of the deed which required the transfer of all the shares in Brookside Properties Ltd (“Brookside”) from Awataieri Holdings Ltd (“Awataieri”) to Mr Carr.
[5] Brookside owns a property known as “the Styx”, which is mortgaged to the
Bank of New Zealand. Awataieri is associated with Mr Humphries’ interests. [6] The transfer under the deed was not to occur until:
(a) Mr Carr’s trust assigned an advance account to a company associated with Mr Humphries’ interests; and
(b)Mr Carr paid to Awataieri the sum of $140,000, being the amount of the Bank of New Zealand loan, together with all interest from the date of the advance.
[7] Upon those events, security over the assets of Brookside was to be released and the shares transferred unencumbered.
[8] Mr Carr effected the assignment and part performed the deed. The defendant failed to perform. That led to the order made on 16 November 2006.
[9] Mr Humphries declined to provide a statement of the amount payable as at 30
November 2006. He instead appealed against the orders. He subsequently applied to set aside the orders. A series of steps in the litigation occurred between 12
December 2006 and 28 September 2011, culminating in the Supreme Court declining an application by Mr Humphries for leave to further appeal a judgment which the Court of Appeal had given on 8 July 2011.
Mr Carr’s desire to effect the ordered transfer
[10] Mr Carr wished to settle the transfer of the Brookside shares on 30 November
2006 in terms of the summary judgment he had obtained on 16 November 2006. To do so he was required by reason of the terms of the Court Order to pay the $140,000 representing the Bank of New Zealand loan together with interest paid on that loan from the date of the loan to 30 November 2006.
[11] Following the Court of Appeal’s dismissal of Mr Humphries’s appeal in July
2011, Mr Carr’s solicitors wrote to Mr Humphries’s solicitors requesting a settlement statement in terms of paragraph 1(a) of the Order. They stated that the amount should be $140,000 plus interest paid on the Bank of New Zealand loan from the date of the advance to 30 November 2006. Mr Carr’s solicitors rejected the limitation of interest to the 30 November 2006 date, asserting that interest continued
to accrue until the date the advance was repaid to the Bank of New Zealand, which was stated to be 30 September 2010. Mr Humphries’ solicitors presented a settlement statement with interest calculated on that period.
[12] As a result of the disagreement between the parties, settlement has not since occurred.
The application before the Court
[13] Pursuant to leave reserved by paragraph 5 of the Order, the plaintiff seeks directions for the purposes of implementing the Order. The specific directions sought are –
(a) That the amount payable under paragraph 1(a) of the Order is
$140,000 plus interest properly paid to the BNZ in respect of the loan from the date of the advance to 30 November 2006.
(b)Within 5 working days of the date of the orders/directions, the defendant provides to the plaintiff a settlement statement showing the amount required to settle, calculated in accordance with paragraph (a) above, including documentation from the BNZ supporting the interest calculation.
(c) That the date of settlement shall be 10 working days from the date of the orders/directions.
(d)That, within 8 working days of the orders/directions, the defendant provide to the plaintiff the following:
(i)A duly executed share transfer form in respect of all the Brookside shares specifying Awataieri as the transferor and the plaintiff as the transferee.
(ii)A duly executed Brookside directors’ resolution and Brookside shareholders’ resolution to register the transfer.
(iii)A duly executed resignation of the existing Brookside director(s).
(iv)A duly executed Brookside shareholders’ resolution to appoint the plaintiff as sole director of Brookside.
(e) That the documentation in paragraph (d) above be held in escrow by the plaintiff pending settlement.
(f) That the defendant cause the BNZ mortgage over the Styx property to be discharged on, or prior to, the plaintiff paying the settlement monies.
(g)That the defendant cause the caveat over the Styx property registered in favour of his son, Richard John Humphries, to be withdrawn on, or prior to, the plaintiff paying the settlement monies.
(h)That the defendant provide, immediately prior to settlement, evidence that there are no registered security interests over the shares in Brookside or the assets of Brookside.
(i) That the defendant provide the Brookside company key on settlement.
(j)That the parties be reserved leave to apply to the Court if there are any difficulties complying with the above directions but that the defendant otherwise be in contempt of Court if he fails to comply with the above directions.
[14] The single issue which arises for determination in this judgment is as to the amount of interest (on the $140,000 advance) to be paid by Mr Carr to Mr Humphries.
Submissions for Mr Carr
[15] For Mr Carr, Mr Bayley submits that interest is to be calculated to 30
November 2006 only because:
(a) The Order (paragraph 1(a)) provided that interest was to be calculated to 30 November 2006;
(b)By the doctrine of merger, the contractual obligation under the deed became merged in the judgment so that the date specified in the Order must be determinative. Accordingly, the implied date for calculation of interest under the deed (the date of the transfer of the Brookside shares) no longer applies.
(c) Mr Humphries’s unsuccessful appeals and other steps in relation to the Order inhibited execution – Mr Humphries is not entitled to additional interest occasioned by delay which he caused.
(d)An amended settlement agreement which the parties entered into in May 2007 is irrelevant and does not affect the Order – as found by the Supreme Court,1 Mr Carr, by electing to cancel the amended settlement agreement, restored the status quo ante for each party. Mr Carr is therefore entitled to revert to the original position and to enforce the terms of the Order.
Submissions for Mr Humphries
[16] Mr Gilchrist submitted that Mr Humphries is entitled to all interest paid to the
Bank of New Zealand on the $140,000 advance from the date of the advance. He says that this is so because –
1 Humphries v Carr [2011] NZSC 115 at [3].
(a) The Order did not specify a sum to be paid but rather referred back to the Deed with the words (in paragraph 1(c)) “the amount required to settle”;
(b)While there has been “considerable litigation”, Mr Humphries has been successful at various times during the litigation and should not be penalised for pursuing legitimate rights of appeal;
(c) The doctrine of merger does not apply in this case as the Order refers back to the deed and to calculations under the deed. The contractual right to interest under the deed not only survived the Order but was effectively a term of the Order.
Discussion
[17] The summary judgment entered on 16 November 2006 entitled Mr Carr to take a transfer of the shares in Brookside in return for payment of the $140,000 Bank of New Zealand advance and the interest payable paid thereon “as at 30 November
2006” – see paragraph 1(a).
[18] The calculation of interest was to be to 30 November 2006 precisely because the Court was ordering that the settlement of the Brookside shares transfer be completed on that date. By the judgment, leave was reserved to Mr Carr to apply for further orders as to the execution or implementation of the summary judgment. That was an understandable mechanism given that Mr Carr might not be able to have Mr Humphries complete the transaction on 30 November 2006 as ordered. Mr Carr for instance, might have to return to the Court to request an extended date for the transfer of the shares if Mr Humphries refused or otherwise failed to comply with the order on 30 November 2006. Mr Carr might also need the assistance of the Court in relation to completion of a transfer document. In such circumstances the Court would need to respond to the situation to see its orders implemented, even if late.
[19] There was nothing in the summary judgment to permit the defendant to return to this Court with a request to amend the stipulated amount of interest. The Order
meant in its terms that if Mr Humphries were to fail to complete the transfer of shares on 30 November 2006, then the calculation of the amount of interest payable would still be “as at 30 November 2006” when that transfer eventually took place.
[20] Nothing in the appeals and other steps taken by Mr Humphries since that time has altered the terms of the summary judgment. Leave was not reserved to Mr Humphries to return to this Court for alteration of the interest calculation. Such alteration would need to have taken place in the context of a successful appeal, which has not occurred.
[21] What Mr Carr seeks is a set of specific directions appropriately framed to ensure that the settlement ordered by this Court to occur on 30 November 2006 – now long overdue – should occur within the defined time frame and conditions. The first such direction, which involves interest properly paid to the Bank of New Zealand in respect of the loan from the date of the advance to 30 November 2006, is simply the implementation of paragraph 1(a) of the Order.
[22] Had I not found the Order to be clear in its terms, I would have found that this was a suitable case in which to respond favourably to an application by Mr Carr for further directions as to the execution or implementation of the 16 November
2006 Order. It is the case that Mr Humphries was (as Mr Gilchrist submitted) entitled to pursue rights of appeal or of leave to appeal. But it is an entirely different proposition to suggest that an appellant, when exercising right of appeal, is relieved from the financial or other consequences of failing to observe an extant order of the Court of first instance. The exercising of appeal rights does not (without further order) serve to stay a judgment of the High Court: see rule 12(1) Court of Appeal (Civil) Rules 2005. In a similar way, the pursuit of appeal rights does not serve to extend a period for payment which has been defined in the judgment.
[23] Accordingly, even had the interest calculation by reference to 30 November
2006 not been made specific in the summary judgment, I would have considered this an appropriate case pursuant to the leave reserved under paragraph 5 of the Order to make a further Order in relation to implementation, providing for the calculation of interest only as far as 30 November 2006.
[24] On behalf of Mr Humphries, Mr Gilchrist understandably did not take issue with any of the specific directions sought by Mr Carr, save in relation to the calculation of interest to 30 November 2006.
Orders
[25] I order, in relation to the execution and implementation of the Orders
contained in the Court’s summary judgment dated 23 November 2006 that:
(a) The amount payable under paragraph 1(a) of the Order is $140,000 plus interest properly paid to the BNZ in respect of the loan from the date of the advance to 30 November 2006.
(b)Within 5 working days of the date of these orders/directions, the defendant is to provide to the plaintiff a settlement statement showing the amount required to settle, calculated in accordance with paragraph (a) above, including documentation from the BNZ supporting the interest calculation.
(c) The date of settlement shall be 10 working days from the date of these orders/directions.
(d)Within eight working days of these orders, the defendant provide to the plaintiff the following:
(i)A duly executed share transfer form in respect of all the Brookside shares specifying Awataieri as the transferor and the plaintiff as the transferee.
(ii)A duly executed Brookside directors’ resolution and Brookside shareholders’ resolution to register the transfer.
(iii)A duly executed resignation of the existing Brookside director(s).
(iv) A duly executed Brookside shareholders’ resolution to appoint
the plaintiff as sole director of Brookside.
(e) The documentation in paragraph (d) above is to be held in escrow by the plaintiff pending settlement.
(f) The defendant is to cause the BNZ mortgage over the Styx property to be discharged on, or prior to, the plaintiff paying the settlement monies.
(g)The defendant is to cause the caveat over the Styx property registered in favour of his son, Richard John Humphries, to be withdrawn on, or prior to, the plaintiff paying the settlement monies.
(h)The defendant is to provide, immediately prior to settlement, evidence that there are no registered security interests over the shares in Brookside or the assets of Brookside.
(i) The defendant provide the Brookside company key on settlement.
(j)The parties are reserved leave to apply to the Court if there are any difficulties complying with the above directions but the defendant is
otherwise in contempt of Court if he fails to comply with these orders.
Costs
[26] Costs should follow the event. Counsel have responsibly limited the time taken over these additional directions by making their submissions by memorandum. A brief telephone conference was held to ensure that the parties wanted the matter determined on the papers.
[27] By analogy with item 4.12 of Schedule 3 of the High Court Rules (preparing interlocutory application and affidavits) and on a 2B basis, I find $1,128.00 ($1,880 x 0.6) to be an appropriate sum for the costs of these additional directions.
[28] I order that the defendant pay to the plaintiff in relation to these additional directions costs in the sum of $1,128.00 together with disbursements to be fixed by the Registrar.
Solicitors:
Rhodes & Co – [email protected]
Dyer Whitechurch – L Nicholson – [email protected]
A Gilchrist, Barrister, Auckland: [email protected]
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