Clements v Thurlow

[2013] NZHC 760

THERE IS AN ORDER UNDER RULE 3.12(1) OF THE HIGH COURT RULES LIMITING ACCESS TO THE COURT FILE, TO THE INTENT THAT THE IDENTITY OF JOHN DOE IN THE JUDGMENT OF

15 APRIL 2013 IS NOT TO BE PUBLISHED.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-2725 [2013] NZHC 760

BETWEEN  LAYLA KATHLEEN CLEMENTS Plaintiff

ANDCLIFFORD FRANK THURLOW Defendant

Hearing:         On the papers

Counsel:         R S Pidgeon for Plaintiff

Defendant in person

Judgment:      15 April 2013

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on  15th April 2013 at 5:00pm

pursuant to Rule 11.5 of the High Court Rules.

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

Registrar/Deputy Registrar

Solicitors:

Pidgeon Law (R S Pidgeon) P O Box 6535 Auckland 1141, for Plaintiff

Email:    [email protected] / [email protected]

Copy for:

C F Thurlow, 259 Lower Higham Road, Gravesend, Kent DA12 2NP, United kingdom

Email:    [email protected]

CLEMENTS V THURLOW HC AK CIV-2012-404-2725 [15 April 2013]

[1]      On 14 June 2007 Layla Clements and Clifford Thurlow signed a deed to settle a proceeding between them.   Under the deed, Ms Clements undertook to transfer her one-tenth interest in a property at 8 Blundell Place, Birkenhead, Auckland,  to  Mr Thurlow  in  consideration  of  the  payment  of  $60,000.    In  this proceeding, Ms Clements’ first cause of action seeks specific performance of the provisions  for  transfer  of  the  interest  in  8  Blundell  Place  and  for  payment  of

$60,000.  For a second cause of action, she applies for orders under Part 6, Subpart 5 of the Property Law Act 2007 for the sale of the property at 8 Blundell Place and the division of proceeds.  She has applied for summary judgment.  Mr Thurlow opposes. He has also filed a counterclaim.

Preliminary matters

[2]      Mr  Thurlow  lives  in  England.    At  an  early  stage  of  the  proceeding  he

contested  the  court’s  jurisdiction  to  hear  this  proceeding.    In  my  decision  of

21 September 2012 I held against him:  New Zealand is the appropriate forum for

both of Ms Clements’ claims.

[3]      Mr Thurlow has not instructed lawyers to represent him, but is defending this proceeding in person.  Because he lives in England, I gave directions for the parties to file submissions, following which I have decided the case on the papers.

[4]      In this decision it will be necessary to refer to another deed of settlement with a third party.  In the earlier proceeding, Allan J made an order against publication of any details that would identify that third person.  Accordingly, in this decision I will refer to that third person as “John Doe”.

[5]      There is no dispute as to the principles to be applied on a summary judgment application.  It is only necessary to refer to the Court of Appeal’s summary of the principles in Krukziener v Hanover Finance Ltd1 without repeating them.

[6]      Mr Thurlow’s notice of opposition sets out a number of the grounds under

five heads:

(a)       Errors  in  the  documents  served  and  the  conditionality  of  the settlement deed.

(b)      The plaintiff’s right to the deed of settlement is forfeit.

(c)       The evidential basis for the application and enforcement of the deed of settlement is flawed.

(d)      The order sought is excessive, disproportionate and unreasonable.

(e)       Aspects of the plaintiff’s case are irrelevant to the decision on the order sought.

[7]      In some matters, Mr Thurlow has found fault with Ms Clements’ documents. In others he has pointed to missing evidence.  In some he has put Ms Clements to proof.   In others he has asserted positive defences and in yet others he says that Ms Clements has strayed into irrelevancy.   It is unnecessary for this decision to address each and every point made by Mr Thurlow.   I have identified the salient points on which he relies and address those.

[8]      Mr  Thurlow  has  filed  a  counterclaim.     Ms  Clements  says  that  the counterclaim is out of time and in any event applies to strike out the counterclaim.  It will be necessary to consider what, if any, orders ought to be made in respect of the

counterclaim.

1   Krukziener v Hanover Finance Ltd [2010] NZAR 307 (CA) at [26].

[9]      Some of the differences between the parties that led to the earlier proceeding have coloured the way the parties have presented their cases in this proceeding.  For this decision I am not required to determine the merits of the earlier differences in the earlier proceeding. They are not relevant to the decision in this case.

The earlier proceeding

[10]     The  earlier  case  was  in  this  court.    Mr  Thurlow  was  the  plaintiff  and Ms Clements was the defendant.  They had been in a relationship.  He sued her for contractual misrepresentation, deceit and rescission to set aside gifts he alleges were induced by fraud.  They began their relationship in England as escort and client.  He says it developed into something more, lover and mistress.  She says that it remained a  commercial  arrangement  for  the  provision  of  sexual  services.    In  late  2003

Ms Clements came to live in New Zealand.  Mr Thurlow remained in England.  The relationship continued, with Mr Thurlow providing her with significant material support.     During  the  relationship  he  bought  the  house  at  8  Blundell  Place, Birkenhead, which they owned as tenants in common in equal shares (nine-tenths to him and one-tenth to her).

[11]     The relationship came to an end in 2009 when Mr Thurlow found that she was in an intimate relationship with another man.  In the proceeding he sought restitution of all the benefits he had conferred on her.   He put the value of the benefits at over $580,000.  The proceeding was given a fixture to begin on 13 June

2011.

The deed of settlement

[12]     Mr Thurlow came to Auckland for the hearing.  On 12 June 2011 Mr Thurlow and Ms Clements took part in a mediation with a very experienced barrister to see if the matter could be settled.   They did not reach agreement on that day, but on

13 June  2011  the  start  of  the  proceeding  was  adjourned  while  settlement  was explored.  Mr Thurlow says that settlement was still not reached on 13 June but on

that evening, Mr Thurlow says that he received a text message from Ms Clements which led him to consider exploring settlement further.

[13]     The proceeding was  stood down on  14 June 2011 for more discussions. Ms Clements and Mr Thurlow discussed matters privately, without their lawyers. Following that discussion, with input from their lawyers, terms for a settlement were agreed and a deed of settlement was drawn up and signed.

[14]     The  deed  meets  the  formal  requirements  for  a  deed.    For  this  case  the significant provisions are:

1In consideration of the payment of $60,000 which shall be paid to the trust account of Hucker and Associates on behalf of Layla, Layla will transfer her one-tenth interest in the property to Cliff and makes no further claim and claims no interest in any chattel currently located in the property, nor does she make any other claim to ownership and/or as to any other interest in the property.

...

4As a condition of settlement, Layla agrees (out of the proceeds of the settlement) to procure the discharge of the statutory land charge and the caveat lodged against the title by the Legal Services Agency promptly.

5The parties agree that the execution of this deed is in full and final settlement of all issues and differences arising between them as at the date of the execution of this deed whether raised in the proceedings and/or otherwise.

6Upon the transfer of Layla’s one-tenth interest in the property as referred  to  above,  Cliff  will  immediately  discontinue  the proceedings.  It is agreed that no orders as to costs by either party against the other are to be sought in that proceeding.

7This  settlement  is  conditional  upon  the  parties  entering  into  a settlement deed with Mr [John Doe] on terms that Mr [Doe] pay

$15,000 in costs to Cliff and does not make any claim against Layla

for any contribution towards such payment.

[15]     The deed also provided that: each party would pay their own costs; each would execute all the documents necessary to give effect to the deed; the terms of the  deed  were  confidential  to  the  parties  and  their  advisors  and  would  not  be disclosed to any third party except to the extent required by law and to the extent

necessary to enforce the terms of the deed in the event of breach by one or other of the parties; and each had been independently advised before signing the deed.

[16]     Mr Thurlow has put weight on matters that he and Ms Clements discussed privately on 14 June 2011.  Those matters are addressed in considering his grounds of opposition.

[17]     In light of the settlement that the parties had entered into, the hearing of the earlier proceeding did not go ahead, although to date the proceeding has not been formally discontinued.

The application for specific performance

[18]     In   December   2011   Mr   Clements’  lawyers   made   formal   demand   on Mr Thurlow’s New Zealand lawyers to complete the transfer of 8 Blundell Place and payment of $60,000.   Mr Thurlow has since declined to complete the settlement. Ms Clements seeks an order for specific performance to complete settlement.

[19]     Mr Thurlow’s opposition to carrying out the agreement comes down to three

main matters:

(a)       The deed does not fix a time for settlement;

(b)Ms Clements has not shown that the condition in clause 7 has been satisfied;

(c)      She  had  been  dishonest  in  what  she  told  him  in  their  private discussion on 14 June 2011.  This allegation of dishonesty goes to two aspects:  whether there is a substantive defence and how the court should exercise its discretion when considering whether to order specific performance.

[20]     Mr Thurlow’s evidence refers to payments he made after 14 June 2011 to meet expenses and debts of Ms Clements.  I have considered whether that evidence was included so that those payments could be taken into account against his liability

to pay the $60,000.  However, Mr Thurlow has not raised that as part of his defence. His evidence as to those payments is consistent with him making those payments voluntarily, based on his belief that his relationship with Ms Clements had revived, following the settlement.

[21]     Mr Thurlow does not dispute that he entered into the deed of settlement. Apart from the particular matters of defence to be considered, he has not raised any arguments that the deed is not enforceable.

The absence of a time fixed for settlement

[22]     Mr Thurlow’s first defence is that clause 1 of the deed does not specify any date or time for settlement.   His argument is that as no time has been set for settlement, he cannot be in default.  However, the agreement is not to be stultified because a time for settlement has not been fixed.  The parties have undertaken to complete the transaction.   If they have not specified a time, the court will require them to settle within a reasonable time.  The agreement does not fail for uncertainty.

McMorland’s Sale of Land says:2

Normally the contract will specify a settlement date, but if it does not it is implied by law that settlement is to take place within a reasonable time.

McMorland also notes:

What is a reasonable time is to be determined on the facts of each case, but it must be seen as at the date of the contract and judged on an objective test from the point of view of both parties.

[23]    There is no evidence of Ms Clements calling for settlement earlier than December 2011.   Mr Thurlow cannot complain that that is too early.   He has had ample time in which to send the funds to New Zealand for arrange settlement.  The absence of a time fixed for settlement in the deed does not give Mr Thurlow an arguable defence.

[24]     Ordinarily, I would regard one month after the signing of a deed of settlement such  as  this  as  being  a  reasonable  time  within  which  to  complete  settlement.

2   D W McMorland Sale of Land (3rd ed, Cathcart Trust, Auckland, 2011) at [11.04(a)].

However, some further allowance is reasonable in the circumstances of these parties, given that Mr Thurlow returned to England and he would need time within which to put funds together and remit them to New Zealand to complete settlement.  However, I would not regard that added time as being much more than two to three weeks.

[25]     Accordingly, the agreement is enforceable, even thought it did not fix a time for settlement.

Was Clause 7 satisfied?

[26]     Clause 7 of the deed of settlement made the settlement conditional on the parties entering into a settlement deed with Mr John Doe.   Mr Thurlow took the point that Ms Clements had not shown that the condition had been satisfied.  In reply evidence, Ms Clements has produced the settlement agreement of 14 June 2011 between Mr Thurlow, herself and John Doe.  That settlement agreement meets the requirements of clause 7 of the settlement deed. The deed of settlement for this case did become unconditional on the day the parties signed it.

Dishonesty allegation – substantive defence

[27]     Mr Thurlow’s dishonesty allegation against Ms Clements goes to their private discussion on 14 June 2011, not to earlier times.  In the proceeding then pending in court, he had already accused her of dishonesty.   Since 2009 he had arranged surveillance  by private  investigators.    They had  provided  him  with  information which he intended to use to establish that she had lied to him.  He acknowledges that by 14 June 2011 his trust in her was non-existent.  Accordingly, because he was already aware of alleged past dishonesty by her, he cannot rely on alleged dishonesty before 14 June 2011 as a defence. Instead, it turns on the conversation on 14 June

2011.

[28]     Part  of  the  impetus  for  the  parties  to  consider  settlement  was  that Ms Clements had attempted suicide on 6 June 2011.  That is corroborated by hospital records.  The hospital records note that she had been depressed and stressors had become too much for her to bear.   She felt she was not coping.   The stressors

recorded by the hospital were that she was a single mother without support from the child’s father, she had minimal social supports, she was working as an escort and with the forthcoming court appearance she was worried about media coverage.

[29]     Mr Thurlow had taken her message of 13 June 2011 as a cry for help.  His evidence is that Ms Clements asked for a one-to-one conversation with him at court. He says that she was very emotional and cried at times.  She was sorry that she had lied to him about her life and relationships with other men since she had lived in New Zealand, and she acknowledged that he had always been loving and supportive towards her.  He says that she acknowledged that the defence she was putting up - that they were in a purely business relationship - was not true.   He says that she made it clear that she wished to put all their differences behind them and to resume a personal relationship, which they had had before.  He also says that she said that she had resorted to prostitution to earn money.

[30]     Mr Thurlow’s evidence goes on:

My response was that after two years of uncovering her previous dishonesty, deception and fraud and trying to get acknowledgment of this and compensation through the Auckland High Court, I could only enter into an out-of-court settlement with the plaintiff in order to help her out of her desperate situation if she was willing to assure me that she would be completely open and truthful both about her past life and deceit.  Similarly, she would need to be completely open and truthful with me about her aspect of her life going forward.  Likewise, she would need to be completely open and truthful with her family, including about her relationship with me, because secrets and lies would not help any of us rebuild trust and put the past behind us.  I explained that my trust in the plaintiff was, by then, non- existent, and needed to be re-built.  The plaintiff agreed and said that she understood why I would insist on this openness and truthfulness about past events and going forward, and the need for me to be able to trust her again, once again readily acknowledging her previous dishonesty and deceit.

[31]     According  to  Mr  Thurlow,  she  did  not  refer  to  her  drug  use  in  that conversation or later.  He later found out that she was addicted to cocaine.  He notes that she had referred to that in an affidavit sworn in May 2009.  However, he sets out evidence which suggests that, unknown to him, her drug use had continued in New Zealand, and that she had associated with drug dealers.  She had deceived him about this during their relationship.  He contends that Ms Clements deliberately chose to keep the extent of her drug use from him during the discussion and leading up to the

court settlement.  He says that if he had known about her addiction, he would have been less sympathetic to the straitened personal circumstances she presented.

[32]    For this decision, I assume that Mr Thurlow may be able to make out his contentions as to the conversation and what he found out later.  In a reply affidavit, Ms Clements has made brief responses to Mr Thurlow’s evidence.  She says: that she did speak freely about her past and had nothing to hide; that Mr Thurlow knew for an extended period of time about her battles with cocaine; that she was extremely emotional at the time of the discussion and there were many issues; and that the conversation was an opportunity for Mr Thurlow to assess whether the “cry for help” was genuine.  She denies deceiving him.

[33]     While Mr Thurlow’s evidence cannot be dismissed out of hand in a summary judgment application, the court must still assess whether the facts he alleges give him any defence to the present claims.

[34]     In part, Mr Thurlow has recorded Ms Clements as making a promise to him – that is, that if they resumed their relationship, she would be completely open and truthful with him including about past events.   Simply making a promise is not dishonest unless the person making the promise has no intention of carrying it out. Mr Thurlow’s case must be that in the discussion on 14 June 2013, Ms Clements had no intention of being open and completely honest with him.

[35]     Mr Thurlow relies on her non-disclosure of cocaine use in the private meeting on  14  June  2011  as  being  an  act  of  dishonesty.    It  is  a  trial  issue  whether Ms Clements’ promise (if she made it) required her, there and then, to give him details of drug use and associations with drug dealers.

[36]     Mr Thurlow also says that it was a pre-condition of the settlement that she be open with him.  In putting the matter that way, Mr Thurlow is saying that a part of the settlement agreement was that she be open, that is, that that was part of the deal made on 14 June 2011. The deed of settlement does not contain any such term.  The deed of settlement is complete in itself.  The parol evidence rule stands in the way of Mr Thurlow importing other terms.   In other words, Mr Thurlow’s claim of “pre-

condition” does not give him any basis for saying that there was any term in the contract that allows him to resist performance.

[37]  The matter can instead be considered as a matter of contractual misrepresentation.  Mr Thurlow’s case seems to be that he can avoid the contract for misrepresentation.  Under English common law, a contract induced by fraud may be rescinded.  On rescission, the parties are put back in the position they were in as if they had never entered into the agreement.  But that is not the law in New Zealand. Under  the  Contractual  Remedies Act  1979,  the  old  rescission  rules  have  been

repealed.3    Instead the remedies for contractual misrepresentation are cancellation4

(with the right to seek relief under s 9 of the Contractual Remedies Act) and damages.5

[38]     Cancellation takes effect when the cancellation is made known to the other party.6    On cancellation, so far as the contract remains unperformed at the time of cancellation, no party shall be obliged or entitled to perform it. But, so far as the contract has been performed at the time of cancellation, no party shall by reason only of the cancellation be divested of any property transferred or money paid pursuant to the contract.7

[39]    Mr Thurlow has not given any evidence directed at showing that he has cancelled and made that known to Ms Clements.  No particular form of words is required to cancel a contract so long as the intention to cancel is made known. Mr Thurlow’s notice of opposition to the application for summary judgment, with its plea that Ms Clements’ rights under the settlement are forfeit, may be taken as a cancellation under s 8(2).   However, there is no evidence that Mr Thurlow gave notice of cancellation at any time before.

[40]     Before Mr Thurlow gave his notice of opposition, the time for settlement had already fallen  due.    Ms  Clements  was  ready,  willing  and  able  to  complete  the

settlement.  Her right to complete the settlement had already accrued.  When a right

3   Contractual Remedies Act 1979, s 7(1).

4   Sections 7(2)-(4).

5   Sections 6(1) and 8(4).

6   Section 8(1)(a).

7   Section 8(3).

to enforce a contract has already accrued before a party purports to cancel it, the accrued  rights  may be  enforced.    Cancellation  only discharges  the parties from further performance.8  Accordingly, Mr Thurlow’s purported cancellation through his notice of opposition was ineffective to release him from the performance of obligations that had already accrued under the contract.   He was still under a contractual obligation to pay the $60,000 for the transfer of Ms Clements’ interest in the Blundell Place property.  Accordingly, Mr Thurlow’s argument that he was induced to enter into the deed of settlement by misrepresentations by Ms Clements

does not give him a defence to the claim for specific performance.

Dishonesty allegation – exercise of discretion

[41]     Does Ms Clements’ alleged dishonesty give grounds for the court to exercise its discretion not to grant equitable relief by way of an order for specific performance?  The court has a discretion whether to grant specific performance. Amongst other grounds, the court may refuse specific performance if there has been disentitling conduct on the part of the plaintiff, that is, coming to court with unclean hands.  Disentitling conduct may include fraud, undue influence and unconscionable conduct.  The court’s power to refuse specific performance on discretionary grounds is saved under s 15(a) of the Contractual Remedies Act 1979.

[42]    The disentitling conduct Mr Thurlow relies on is Ms Clements’ alleged deceitfulness in not fronting up with information about her cocaine addiction and association with drug dealers while living in New Zealand.

[43]    I have already found that Mr Thurlow is bound to complete the deed of settlement.  The question here goes to remedy.  If specific performance is refused, the parties will be left to their common law remedies – damages.  The deed of settlement would still remain in full force and effect. Accordingly, in considering the exercise of the discretion, the court may also take into account the effects of not

granting specific performance. Those aspects are important in this case.

8   Section 8(3)(b) and Garratt v Ikeda [2002] 1 NZLR 577 (CA).

[44]     Under clause 6 of the deed of settlement, Mr Thurlow is not required to file a discontinuance  of  the  earlier  proceeding  until  Ms  Clements  has  completed  the transfer to him of the one-tenth interest in Blundell Place.  But Ms Clements cannot be required to transfer that interest until Mr Thurlow pays her $60,000.  However, Mr Thurlow could not prosecute the earlier proceeding, because the deed of settlement is in full and final settlement of all issues and differences between them at the time of the deed.  At the same time Mr Thurlow and Ms Clements would remain co-owners of Blundell Place, even though they had agreed to separate their interests in the property.  In all, refusing specific performance would result in a disorderly stalemate.   The court would be doing both parties a disservice if it were to leave them in such a mess. It is therefore appropriate to assess whether specific performance should be refused, even if Mr Thurlow makes out his claims of misrepresentation by Ms Clements.

[45]     What is called for is to weigh Mr Thurlow’s complaint that he was deceived into entering into the agreement against the benefits of holding the parties to the agreement.  Mr Thurlow’s allegations of misrepresentation can be put into context. He had brought a proceeding against Ms Clements alleging that she had deceived him.  His evidence in this proceeding is that he no longer trusted her.  The matter on which he has accused her of dishonesty goes to her immoral and disreputable lifestyle, a matter he had already put in issue in the earlier proceeding.    On his account, she acknowledged the weakness in the defence she intended to run in the hearing.   That may have inclined him to continue his claim.   Notwithstanding all that, he chose to settle with her on terms that would allow them to disengage their interests in Blundell Place and to bring their litigation to an end, at the same time aware that he had lost his trust in her.

[46]     If Ms Clements did lie to him on 14 June 2011, that is not to be condoned. However, even if she did, in the circumstances of this case it is not so serious that it requires that specific performance be refused.    There are countervailing considerations for upholding the agreement.   It will enable the parties to separate their interests in the Blundell Place property.  It is important that the parties reached an agreement to settle their proceeding. The courts take a favourable view of consensual resolution of disputes.  If the courts were to readily allow arguments as to

misrepresentation in negotiations for settlements, the value of settlements would be weakened.  A stalemate will be avoided.   In running his allegations of dishonesty, Mr Thurlow appears to be seeking the opportunity to run again the argument which he was relying on in his original claim, and which he agreed were now settled and should not be re-opened.

[47]    For these reasons, even if Mr Thurlow makes out his misrepresentation allegations, the court would not allow them to stand in the way of an order for specific performance.  Accordingly, Ms Clements has shown that Mr Thurlow does not have an arguable defence to the claim for specific performance.

Ms Clements’ application under the Property Law Act 2007

[48]     For the second cause of action, Ms Clements seeks orders under ss 339 and

343 of the Property Law Act 2007 for the Blundell Place property to be sold by auction, with agents to be appointed and a reserve set, and with Mr Thurlow to pay all the costs of sale.   Her application under the Property Law Act 2007 is in the alternative to  the claim  for specific performance.   The  court  cannot  order both specific performance of the deed of settlement and a division of property in the terms sought in her second cause of action.  The claim for specific performance seeks performance of the deed of settlement.  That requires Ms Clements to transfer her interest in 8 Blundell Place to Mr Thurlow.  On the other hand her application under the Property Law Act 2007 requires the property to be sold and the proceeds of sale divided  between  the  parties.     Clearly  that  cannot  stand  with  an  order  that Ms Clements transfer her interest in the property upon payment by Mr Thurlow. Accordingly, the application under the Property Law Act 2007 only arises for consideration if the court does not order specific performance.

[49]    The same point can be made in another way as well.  Under the deed of settlement,  the  parties  agreed  on  how  they  would  separate  their  interests  in

8 Blundell Place.  In her application under the Property Law Act 2007, Ms Clements proposes a different way.  It may be a good defence to an application under the Property Law Act 2007 that the parties have entered into a binding, enforceable agreement, for the division of their interests in the property.   If the parties have

entered into binding arrangements to divide their interests in the property, then it is an arguable defence that the court ought not to order a division of the property in some other way.

[50]     Mr Thurlow raises another objection.  He points out that even if those matters are put to one side, and the court were to consider a division independently of any agreement between him and Ms Clements, a sale by auction and division of the proceeds  of  sale  is  inappropriate,  when  he  holds  a  90  per  cent  interest  and Ms Clements only 10 per cent.   He is on good ground with that in light of the relevant considerations that must be considered under s 342 of the Property Law Act

2007, in particular, s 342(a) and (c).  It is arguable that it is appropriate to order a nine-tenths owner to buy out the minority interest under s 339(1)(c) rather than order a sale under s 339(1)(a).

[51]     Accordingly, Mr Thurlow has arguable grounds for opposing the orders that Ms Clements seeks under the Property Law Act 2007.  Ms Clements has not made out a case for summary judgment on the second cause of action.

Mr Thurlow’s counterclaim

[52]     Ms Clements objects that Mr Thurlow has filed his counterclaim out of time. Rule 5.55 requires a counterclaim to be filed and served within the time stated in the notice  of  proceeding  for  filing  a  statement  of  defence.    However,  in  this  case, Ms Clements has applied for summary judgment.  The notice of proceeding does not require a statement of defence to be filed.  Instead, a statement of defence is optional only – see r 12.10.  To oppose an application for summary judgment, a defendant is only required to file a notice of opposition and affidavit – r 12.9.   The time for Mr Thurlow to file and serve a counterclaim has not expired.

[53]     The   parties   have   not   made   full   submissions   on   the   counterclaim. Accordingly, the matters set out here are provisional only.

First cause of action

[54]     In his first cause of action, Mr Thurlow says that Ms Clements deceived him over a number of years from 2003 to 2009 into believing that they were in an exclusive  close  personal  relationship.    He  gave  her  a  one-tenth  interest  in  the property at 8 Blundell Place as a result of her deceit.  He seeks an order re-vesting the one-tenth interest in him.

[55]     In his original proceeding, Mr Thurlow sought an order transferring the one- tenth interest in Blundell Place to him.  The effect of the deed of settlement is that he has agreed no longer to pursue that relief.   Instead, under the agreement, he has agreed to buy out Ms Clements.   As the deed of settlement is binding, its terms prevent him pursuing the first cause of action.

Second cause of action

[56]     For his second cause of action, Mr Thurlow seeks an order for removal of the caveat  no.8679771  in  favour  of  the  Legal  Services  Agency  lodged  against Ms Clements’ interest in the property.  As a matter of procedure, Mr Thurlow would have to join the Legal Services Agency as a party to any claim for removal of its caveat.  I note that the caveat was lodged only against Ms Clements’ interest in the property,  not  Mr  Thurlow’s.    Under  the  deed  of  settlement,  Mr Thurlow  has undertaken to remove the caveat.  As the settlement is to be implemented, it appears that the caveat can be removed that way, without requiring Mr Thurlow to pursue his second cause of action.

Third cause of action

[57]     For his third cause of action Mr Thurlow, in effect, seeks rescission of the deed of settlement.  He seeks a declaration that the deed is null and void.  He relies on the allegations of dishonesty which he also raised in his defence.

[58]  The relief he seeks is misdirected.    The remedies for fraudulent misrepresentation are found in the Contractual Remedies Act, not outside.  The court can  no  longer order rescission  of the contract.   The decisions  I have  made on Ms Clements’ claim mean that he can no longer pursue his third cause of action.

Fourth cause of action

[59]     In his fourth cause of action Mr Thurlow alleges that Ms Clements breached clause  10  of  the  agreement  by  breaching  confidentiality.    He  alleges  that  she disclosed the contents of the agreement to her sister and the father of her child.  He seeks damages of $60,000.  It appears that he may still maintain that cause of action.

Fifth cause of action

[60]     For his fifth cause of action, Mr Thurlow says that the misrepresentations and deceits by Ms Clements that led to him entering into the deed also caused him on

14 June 2011 to enter into a separate verbal agreement to assist her in reducing her indebtedness.  He claims a loss of $10,000 for payments of her debts.  He seeks an order for payment of that sum.   I note that the amount of that claim is within the jurisdiction of the Disputes Tribunal.  It is also within the jurisdiction of the District Court.

Sixth cause of action

[61]     For his sixth cause of action Mr Thurlow alleges that between 1 January 2008 and 31 March 2009 Ms Clements fraudulently misrepresented to him that she owed money for household bills and payments for works to the property.  He says that he paid her money as a result of fraudulent misrepresentations by her.   He seeks reimbursement of $10,000.   This was a claim he made against her in his original cause of action, which is now resolved by the deed of settlement.   It is no longer open to him.

[62]     It appears that only the fourth and fifth causes of action remain open to Mr Thurlow. They can run independently of the implementation of the settlement. A counterclaim is not a defence.  The only viable causes of action in the counterclaim

do not stand in the way of specific performance being ordered on the summary judgment application.

[63]     The amount Mr Thurlow claims for the breach of confidentiality in his fourth cause of action is within the jurisdiction of the District Court, but is outside the jurisdiction of the Disputes Tribunal.  However, the amount sought does appear to be excessive.  The amount claimed in the fifth cause of action is within the jurisdiction of the Disputes Tribunal.   It appears appropriate to transfer both claims to lower courts or tribunals.  The parties are invited to confer to see whether they can be run more efficiently in a lower court than in this court.

Outcome

[64]     I have found that the deed of settlement is valid and enforceable. The matters raised by Mr Thurlow have not shown that the agreement cannot be enforced against him, or that the court should decline to order specific performance. As specific performance is granted, the alternative claim under the Property Law Act cannot succeed.

[65]     Ms Clements seeks interest on the sum of $60,000.  Mr Pidgeon has claimed interest under s 87 of the Judicature Act 1908.   That allows the court to award interest in a claim for debt or damages.  In this case Ms Clements is seeking specific performance, not recovery of a debt or damages.  In equity a purchaser in possession

receiving profits from the property may be ordered to pay the vendor interest.9   That

applies here.  Mr Thurlow is receiving all the income from letting the Blundell Place property.  Ms Clements has been kept out of the purchase price.  I fix the interest rate at 4 per cent per annum, the conventional rate in these cases.  Mr Thurlow is to pay interest on $60,000 at that rate from 30 working days after Ms Clements’ lawyers called for settlement until settlement is carried out.

[66]     The terms for the order for specific performance will need to be spelt out in greater detail.  The order will need to provide a time and date for settlement, and set

9   Birch v Joy (1852) 3 HLC 565, 10 ER 222 (HL); Fraser v Perpetual Trustee Estate and Agency

Co of New Zealand [1978] 1 NZLR 620 (SC) and Hieber v Hieber [1991] 1 NZLR 315 (CA).

out what steps each party must take to carry out settlement.  The parties may find the orders for specific performance in Great Northern Land Company Ltd v Commercial Capital and Equities Ltd and Arranmore Developments Ltd v Zeeland Developments Ltd10 of assistance.  I suggest that settlement be fixed for a date at least 20 working days after the date of this decision.

[67]     I  direct  the  plaintiff  to  draft  the  proposed  orders  and  send  them  to Mr Thurlow within 5 working days of this decision.   Mr Thurlow is to respond within a further 5 working days.  If there are any disagreements, memoranda may be filed.  If Mr Thurlow does not respond, the draft orders are to be submitted for approval and sealing.

[68]     I make these orders:

(a)       The plaintiff’s application for summary judgment is granted for the

first cause of action, but dismissed for the second cause of action;

(b)The  terms  for  the  order  for  specific  performance  are  to  be  fixed following the directions in [65]–[67] above;

(c)      The defendant is to pay the plaintiff costs.  If the parties cannot agree costs, memoranda may be filed for costs to be fixed.  The plaintiff is to submit her proposals for costs to the defendant within ten working days of this decision.  The defendant is to reply within a further ten working days.  The plaintiff is then to file and serve a memorandum as to costs, exhibiting the parties’ correspondence.   If there is agreement, orders will be made in terms of the agreement.  If there is no agreement, I will decide costs on the papers.  If the defendant does not reply, costs may be fixed in any event;

(d)      The parties are to confer as to the management of the defendant’s

counterclaim.   Again the plaintiff is to submit her proposals within

10    Great Northern Land Company Ltd v Commercial Capital and Equities Ltd HC Auckland CIV-

2009-404-7529 and Arranmore Developments Ltd v Zeeland Developments Ltd (2011) 11 NZCPR

825 (HC).

10 working  days  and  the  defendant  is  to  reply  with  a  further

10 working  days.     The  plaintiff  is  then  to  file  and  serve  a memorandum exhibiting the parties’ correspondence. If there is agreement, orders will be made in terms of the agreement.  If there is no  agreement,  I  will  give  further  directions,  which  may  include transfer to a lower court or tribunal, on the papers.  If the defendant does not reply, directions costs may be given in any event;

(e)       Leave is reserved to apply for further directions.

(f)       There is an order under r 3.12(1) limiting access to the court file, to the intent that the identity of John Doe in this judgment is not to be published.

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

Associate Judge R M Bell