Cockrell v Ward

[2013] NZHC 2368

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-7155 [2013] NZHC 2368

BETWEEN  BRAD & ELLEN LOUISE COCKRELL, as Trustees of the COCKRELL FAMILY TRUST

Plaintiffs

ANDRUSSELL STUART WARD Defendant

Hearing:                   22 August 2013

Appearances:           Mr G Stringer and Ms A King for Creditors/Plaintiffs

Mr R Ward Debtor/Defendant

Judgment:                11 September 2013

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on

11.09.13 at 4 pm, pursuant to

Rule 11.5  of the High Court Rules.

Registrar/Deputy Registrar

Date……………

COCKRELL, as Trustees of the COCKRELL FAMILY TRUST v WARD [2013] NZHC 2368 [11 September

2013]

Background

[1]      The plaintiffs purchased a property at mortgagee sale in September 2012. The mortgagee was the ANZ bank.  The defendant was the mortgagor.  Settlement of the transaction took place on 18 October 2012.   The transaction is noted on the computer freehold register maintained by Land Information New Zealand as being “an exercise of power of sale in Mortgage 7759360.3”.   The defendant however declined to vacate the property.  He had entered into an arrangement for the sale of the property to a third party which post-dated the date of the mortgage being granted to the ANZ.  This arrangement was accompanied by a tenancy back to him.   In a judgment which I issued 18 December 2012 I took the view that such arrangements were not binding upon  the  mortgagee  and did  not prevent it from passing title

together with vacant possession to the plaintiffs.1    An order for possession of the

property was made.

[2]      On 20 December 2012 the sheriff took steps to have Mr Ward vacate the premises which in fact occurred.  The deputy sheriff noted the possession order as having been executed on that date.   The  position since then is not clear.   The defendant produced photographs in evidence which he claimed showed the male plaintiff and another person who he alleged were trespassing in the aircraft hangar which is situated on the property, this having taken place sometime in the period from October to February 2013.   It would therefore seem that the defendant has continued to access the property even after December 2012 but nothing in particular turns upon this and it is unnecessary to come to any firm conclusion on that point.

[3]      As part of the judgment entered against Mr Ward on 18 December 2012, a costs order was made directing him to pay costs of $18,084.47.  He has declined to pay that costs award and as a consequence the plaintiffs served him with a demand. On 9 May 2013 Mr Ward applied to set the bankruptcy notice aside.  The grounds which the defendant puts forward for setting aside the bankruptcy notice are that the

plaintiffs are actually in debt to him to the extent of $213,775.00.   The defendant

1 Cockrell v Ward [2012] NZHC 3434.

takes the position that he has a counterclaim, set-off, or cross demand against the judgment creditors, the plaintiffs, that equals or exceeds the amount claimed by the judgment creditors and that he could not put forward in the action or proceeding in which the judgment or order was obtained.2

[4]      Shortly before the date on which I heard the application for possession of the property, on 10 December 2012 the defendant filed a counter-claim which set out claims, parts of which are constituents of the amount of $213,775 which he has invoiced to the plaintiffs.  Whether the defendant is entitled to an order setting the statutory demand aside will be determined further on in this judgment.

The claims which the defendant makes against the plaintiffs

[5]       The claims of loss which the defendant brings are partly in the form of a counterclaim, referred to above, and partly an interlocutory application together with affidavit in support.

[6]      The defendant’s counterclaim dated 10 December 2012 alleges the following losses were suffered for which he seeks compensation:

a)Losses arising from the spraying of herbicide on the property and the resultant ineligibility of the property for organic farm status and from the loss of organic quality hay which was stored on the property.  This claim  relates  to  activities  which  the  plaintiffs  carried  on  on  the property after they had become the registered proprietors of same as purchasers from the mortgagee;

b)         The plaintiff “encroached on the property” and “removed” fencing,

alkathene piping, troughs;

c)Drove  up  and  down  the  runway  and  taxiway  on  the  property damaging the surface;

2 High Court Rules, r 24.8 and schedule 1, form B2.

d)       Harassed and intimidated the defendant so that he was obliged to remove the stock from the farm with overgrazing causing him loss;

e)         The defendant sought an order requiring the plaintiffs to vacate the

property “currently under the peaceful occupation of the defendant”.

f)          Compensation was sought for “daily breaches of the peace” from 18

October 2012 at $1000 per day;

g)        Compensation for hay and other items including the fencing with no particular quantum being specified; and

h)         Compensation for “stress”.

[7]      By an interlocutory application which he filed 19 March 2013, the defendant sought an order for “recovery of fixtures and chattels” and an order for compensation in relation to the building and other parts.

[8]      In  an  affidavit  dated  19  March  2013  which  he  filed  in  support  of  the application just mentioned the following matters were relied upon as grounds for the various orders which the defendant sought:

a)       The various buildings and structures on the property including the aircraft hangar and the runway were fixtures.   (I understand the defendant to also contend in the affidavit that plants on the property were fixtures).

b)The defendant contended that the plaintiffs had no entitlement to enter into an agreement for the purchase of the property because he, the defendant,  had  in  2011  entered  into  an  agreement  for  sale  and purchase of the property and that that agreement took precedence over the agreement which the mortgagee entered into with the plaintiffs;

c)       The  section  of  the  agreement  for  sale  and  purchase  which  the plaintiffs entered into with the mortgagee bank and which is headed with the words “list all chattels included in the sale” was left uncompleted.    The  defendant  therefore  expresses  the  opinion  that there were no chattels, fixture or fittings included in the sale between the vendor, being the mortgagee, and the purchaser;

d)The hangar building and the runway on the property are fixtures and were not included in the sale from the mortgagee to the plaintiffs.

e)The plaintiffs inflicted loss on the defendant because they “restricted” [the defendant] from  accessing the building on  the property for a period of three months;

f)        The loss is calculated at the rate of $60-70 per square metre per year rental and $10 per square metre per year “outgoings”;

g)         It is alleged that the area of the building is 1000 m²;

h)        The  period  during  which  the  defendant  was  restricted  from  his building was from 18 December 2013 to 18 March 2013, a period of

90 days;

i)          The alleged loss to 19 March 2013 is calculated at $18,493.15.

[9]       It is not open to the defendant to seek judgment by way of an interlocutory application in the way that he has.  The application is irregular and I make orders with regard to it later in this judgment.  It will however be necessary to consider the various claims that are brought in the interlocutory application and the affidavit because although irregular in form, they are counterclaims which the defendants asserts ought to be taken into account on his application to set aside the bankruptcy notice.

The application for order striking out the counterclaim

[10]     The counter-claim has yet to be heard.  On 16 April the defendant filed an application for summary judgment on the counter-claim to which the plaintiffs responded on 22 April 2013 with a notice of opposition and a statement of defence to the counter-claim.   On 22 April 2013 the plaintiffs filed a notice of interlocutory application for orders striking out the defendant’s counter-claim and for security for costs in forfeiture of chattels.

[11]     I will next consider the principles appropriate to a strike-out application and thereafter consider the counter-claim itself.

Strike out applications

[12]     Rule 15.1 High Court Rules governs strike out applications:

(1)  The court may strike out all or part of a pleading if it—

(a)      discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or

(b)       is likely to cause prejudice or delay; or

(c)       is frivolous or vexatious; or

(d)       is otherwise an abuse of the process of the court.

[13]     The   plaintiffs   submit   that   the   defendant’s   counterclaim   discloses   no reasonably arguable cause of action, as all of his claims are based on him having some interest or right to the property which the plaintiffs submit he did not have after transfer of title.

The counter-claim in detail

[14]     In the counter-claim the defendant seeks relief in respect of the following matters.

[15]     First, the defendant says that notwithstanding the conclusion of the Court that the legal ownership of the property passed to the plaintiffs on 18 October 2012, actions  on  the  part  of  the  plaintiffs  after  that  date  were  in  certain  cases  still actionable by the defendant where they caused him loss or damage.   Broadly speaking, the claims divide into two types, with one category being concerned with damage done to fixtures on the property.  The first part of the counterclaim which I have referred to in paragraph [6]a) above relates to spraying of herbicide on the property by the plaintiffs after they took possession of it.

[16]     The history of the matter, in detail, was that the estate in fee simple was transferred to the plaintiffs on 18 October 2012.  On 25 October 2012 the plaintiffs arranged for herbicide to be applied to the property from the air.  The position that the plaintiffs take in relation to this claim is that Mr Ward has no possible claim arising from the spraying of the property because they, and not he, were the owners of the property at the relevant time.

[17]     Notwithstanding that the property was  transferred to the  plaintiffs on  18

October 2012, the defendant contends that certain fixtures which were located on the farm did not become the property of the plaintiffs.  He contends that is so for the reason that the security which the bank/mortgagee took over the property did not extend to fixtures.   He contended that crops and other items (such as what was known as the “hangar building”) on the property remained his property notwithstanding the transfer of title to the land on which they stood.

[18]     To resolve this part of the argument it is necessary to enquire further into the nature of the contractual arrangements between the defendant and the bank and the contents of the memorandum of conditions annexed to the mortgage which constitute a charge that the bank took over the property.

[19]     The agreement which the plaintiffs entered into with the bank following their successful tender at mortgagee sale included the following provision.

28.      Fixture and chattels

28.1     Nothing:

(a)      In the nature of a fixture or chattel; or

(b)      On hire or owned by any tenant or occupant;

Is included in the sale, and no other property will pass with the sale, if the vendor  has  no  right  to  sell  it  under  mortgage  number  7759360.3.    No warranty by the vendor that any such thing is included in the sale is implied.

[20]     The plaintiffs directed my attention to the affidavit which is filed by Ms H K Rule, a legal secretary, sworn on 19 April 2013 which exhibited the mortgage documents.

[21]     The operative provision of the memorandum of the terms of the mortgage was to the following effect:

1.        Mortgage:

The bank has provided, or may from time to time provide, credit or other financial accommodation to the customer or to another person at the customer’s request.   The customer mortgages its estate and interest in the land to the bank to secure payment of money in the bank and performance of obligations owed to the bank.

[22]     In  the  definition  section  of  the  memorandum,  clause  22,  the  following definition appears:

“Land” means the land (and any part of the land) described in this mortgage and includes the Customer’s Interest in the land and every building, fixture and other improvement on or to it.

[23]     If that was the end of the matter, there would be no doubt that the argument which the defendant put forward was inconsistent with what the parties actually agreed to.   That is because the bank had security over the fixtures and the bank agreed to sell the land.   The key part of the contractual arrangements which the applicant,  Mr  Ward,  focuses  upon,  is  clause  28  of  the  agreement  for  sale  and purchase which I have mentioned and in particular that provision states in effect that a fixture will not pass with the sale if the vendor has no right to sell it under

mortgage 775936.3.  The obverse of that statement is that if the vendor does have the power to sell any item it will pass with the sale and, because the bank has taken security over the fixtures on the land, it had power to sell the fixtures.

[24]     Because of the approach that the defendant has taken, the dispute in this case is not whether items such as the hangar building are fixtures, but whether the fixtures in question have been transferred from him to the plaintiffs so that he no longer has any interest associated with such fixtures such as a right to claim for damage to them.

[25]     Hinde, McMorland and Sim state:3

Broadly, a fixture is anything, once a chattel or personal property, that has become so attached to land as to form in law part of the land and to have become  property.    The  principle  is  expressed  in  the  maxim  quicquid plantatur solo cedit – whatever is affixed to the soil belongs to the soil.  It is very difficult to say with precision what constitutes an annexation sufficient for this purpose, but the practical consequences of a chattel becoming a fixture is that property to the chattel will, by operation of the law pass from the owner of the chattel to the owner of the land.

[26]     In the leading textbook on personal property in New Zealand, Garrow and Fenton’s  Law  of  Personal  Property,  the  position  is  explained  in  the  following terms:4

The law of fixtures represents an intermediate zone between the law of personalty and of realty. It exists because of the self-evident fact that chattels are frequently affixed or attached to land; as such a chattel may cease to be an item of personal property in its own right and become part of the land. The question of whether a chattel has been affixed so as to become part of the land arises in a vast range of circumstances and the number of cases in the area, some of them conflicting, bears witness to the difficulties judges have had in this area.

[27]     The legal position is that, in general, a transfer of the land to which the fixtures are attached results in the new owner of the land becoming the owner of the

fixtures.5

3  Peter Twist “The Extent of the Landholder’s Rights” in G W Hinde and others Hinde McMorland

and Sim’s Land Law in New Zealand (online ed, LexisNexis) at 6.036.

4   Roger Fenton (ed)  Garrow and  Fenton’s Law of  Personal Property in  New Zealand  (7th   ed, LexisNexis, Wellington 2010) at 255.

[28]     The defendant submitted that there was doubt whether the memorandum of mortgage which was annexed to the affidavit of Ms Rule in fact was the document that he and the bank entered into.  It is necessary to examine this contention more closely.

[29]     Before doing so I remind myself that strikeout applications are determined on the basis that statements about the facts in the pleading which is sought to be struck out are to be taken as correct.  This does not extend to pleaded allegations which are entirely speculative and without foundation.6

[30]     There is no dispute that the mortgagee, ANZ, registered a mortgage over the defendant’s property the number of which was 7759360.3.  The search copy of the title  which  has  been  produced  shows  that  the  mortgagee  sale  was  carried  out pursuant to that mortgage.  In her affidavit, Ms Rule also provided “View instrument details” document taken from the records of Land Information New Zealand relating to the land with the identifier or title number of the plaintiff’s property, namely, NA

70A/175 and which referred to the memorandum of mortgage number of 2004/4155. This last number is the number which appears on the last page of the memorandum of mortgage which has been extracted from the records of Land Information New Zealand.  Thus there is a link between the memorandum of mortgage which she has produced and the mortgage containing the charge given by Mr Ward over the land, which was registered over the title of the property.

[31]     Mr Ward was driven to submit that any form of memorandum might have been put forward by counsel for the plaintiffs.  Mr Ward made it clear that he was alleging  that  the  Cockrells  and  their  legal  advisors  may have  contrived  a  false memorandum to be put forward in evidence.   I consider it is regrettable that the defendant, who in parts of the evidence before the Court gives the impression of a person who regards it as important to conduct himself honourably, would have made such an allegation.   It is entirely baseless and ought not to have been made.   The submission is rejected.  The strikeout application is therefore to be dealt with on the

basis that the memorandum of mortgage which has been put in evidence as an

5 Body Corporate 95035 v Chang [2011] 3 NZLR 132 (HC).

6 Couch v Attorney General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].

annexure to the affidavit of Ms Rule is the memorandum of mortgage which the defendant and the ANZ entered into.   Further, the terms of that memorandum represent the contract which the two parties entered into.

[32]     In relation to the building and the runway, the starting point when assessing whether these items (and others) have or have not become part of the estate is as stated in Fenton:7

The decision in any given case depends on the degree and object of annexation, but the ultimate question remains whether the thing in issue has become part of the freehold which turns upon the circumstances of each case. The classic statement is that of Blackburn J in Holland v Hodgson:

Perhaps the true rule is, that articles not otherwise attached to the land than by their own weight are not to be considered as part of the land unless the circumstances are such as to show that they were intended to be part of the land, the onus of showing that they were so intended lying on those who assert that they have ceased to be chattels; and that, on the contrary, in article which is affixed to the land, even slightly, is to be considered as part of the land, unless the circumstances are such as to show that it was intended all along to continue chattel, the onus lying on those who contend that it is a chattel.

[33]     More recently the House of Lords has considered the matter in the decision in Elitestone.8   The Elitestone decision in turn was referred to with approval in the New Zealand Court of Appeal judgment in Ports of Auckland.9

[34]     The issue that needs to be determined is whether the building is to be treated as though it were part of the land itself.  This involves questions of fact.  It is not the case that all buildings, such as houses are to be regarded as fixtures all or part of the land.  I respectfully agree with the following passage from Garrow and Fenton:10

Posts  placed  in  the  soil  by  the  occupier,  concrete  walls,  asphalt  paths, concrete steps, houses built on land and the constituent parts such as the doors, windows, walls, chimneys, crates, locks and the like normally belong to the owner of the soil and cease to be personal property.

7 Garrow and Fenton’s Law of Personal Property, above n 11 at 257.

8 Elitestone Ltd v Morris [1997] 1 WLR 687 (HL).
9 Auckland City Council v Ports of Auckland Ltd [2000] 3 NZLR 614 (CA).

10Garrow and Fenton’s Law of Personal Property, above n 11, at  256.

[35]     In the case of Elitestone Ltd the question arose whether the house was or was not  within  the  traditional  category  of  attachments.     In  the  case  there  was photographic evidence of the house.  In his speech, Lord Lloyd said:11

For the photographs show very clearly what the bungalow is, and especially what it is not and what it is not.  It is not like a Portakabin, or mobile home. The nature of the structure is such that it could not be taken down and re- erected elsewhere.   It could only be removed by a process of demolition. This, as will appear later, is a factor of great importance in the present case. If the structure can only be enjoyed in situ, there is at least a strong inference that the purpose of placing the structure on the original site was that it should form part of the realty at that site and therefore cease to be a chattel.

[36]     The above passage is mentioned to illustrate some of the factors that are taken into account when analysing the status of a particular addition to the land.  As I understand the position,  the example of the transportable home, the Portakabin, which Lord Lloyd put forward in the above passage was just that.  It is not to be read as meaning that only clearly transportable homes will be treated as falling outside the usual approach that buildings will be treated as part of the land.

[37]     In the present case photographs of the building were included in the evidence and, based upon them, the building in this case seems to be a substantial one which seems to be affixed to the ground in the traditional way.  It is plainly a fixture.

[38]     The conclusion that I have reached with regard to the fixtures in this case is that irrespective of the form of contract between the defendant and the mortgagee bank, such items as were fixtures passed to the plaintiffs when they acquired their interest in the land.  That is because of the doctrine I have referred to in paragraph [25] above.

[39]     Even if it came down to a question of the contract between the bank and the plaintiffs, the result would have been the same.  That is because it is plain that the fixtures were secured by the mortgage and that by the contract of sale the bank agreed to transfer such fixtures to the plaintiffs.

[40]     The position which I have set out above is clear enough in relation to the building and the paved  area on the property.   Further consideration is required

11 Elitestone Ltd v Morris [1997] 1 WLR 687 (HL) at 690.

though, in respect to the fencing, water pipes and water tanks.   Whether they are appropriately to be viewed as chattels or fixtures is the question that must be determined.

[41]     Whether there is an intention for the item in question to continue as a chattel notwithstanding some degree of fixing, involves consideration of objective rather than subjective factors.12   In considering the purpose of annexation it is necessary to

bear in mind the remarks of Lord Lloyd in Elitestone:13

Many different tests have been suggested, such as whether the object which has been fixed to the property has been so fixed for the better enjoyment of the object as a chattel, or whether it has been fixed with a view to effecting a permanent improvement of the leasehold.  This and similar tests are useful when one is considering an object such as a tapestry, which may or may not be fixed to a house so as to become part of the freehold: see Leigh v Taylor [1902] AC 157.

[42]     So far as fencing is concerned, that would seem as a matter of commonsense to be properly regarded as a fixture.  There is a degree of annexation to the land.  It is not plausible to suggest on an objective basis that the individual components of the fences were regarded as continuing to retain their individual character as chattels after they were built into the fence structure.  As well, fences are more logically to be viewed as items that improve the land and which are left behind by the vendor of the farm because they are essential to the continuing operation of the land as a farm.

[43]     So far as the troughs and associated water pipes are concerned, the position is not identical to that of the fences.  It cannot be assumed for the purposes of a strike out application that troughs and pipes are part of the land.  The following statement that appears in Hinde McMorland and Sim can be taken as a correct statement of the law:14

6.038   The purpose of annexation

The most important element in deciding whether an item has become a fixture is the purpose with which it was brought on to the land.  If it was for the permanent and substantial improvement of land or building, the item is a fixture; but if it was for a temporary purpose or for the more complete enjoyment and use of it as a chattel, then it remains a chattel.

12 Holland v Hodgson (1872) LR 7 CP 328.

13 Elitestone Ltd v Morris [1997] 1 WLR 687 (HL).

14 Peter Twist “The Extent of the Land Owner’s Rights”, above n 10, at 6.038.

[44]     Even though it is not to be assumed on the strike out application that the water pipes and troughs are annexed to the land, objectively considered, the purpose of their being brought onto the land was for the permanent and substantial improvement of the land or building.  It is inherently unlikely that they were brought on to the land for a temporary purpose.   There might be cases where that has occurred and an example might be where a farmer, having a short term tenancy of a property, might set up temporary or makeshift arrangements for water reticulation with a view to removing the property at the conclusion of the tenancy.  There are no indications that that is the case here.   For those reasons I conclude that the water pipes and troughs are similarly fixtures and having become part of the land they have become the property of the plaintiffs.  It follows that the defendant’s counterclaim in regard to those items does not disclose a reasonable cause of action and is to be struck out.

The outcome in relation to the cross-claims that the defendant brings in relation to fixtures

[45]     The effect of the conclusions expressed above is that the fixtures on the property ceased to belong to the defendant after the date when the plaintiffs acquired the freehold title to the property.  Because the defendant’s claim relates to the point after which the plaintiffs acquired title to the property from which time they were entitled to possession, the claim has no basis and could not succeed.

[46]     In particular, because the spraying of the crops took place after the plaintiffs had acquired possession of the property following the date of settlement, there can be no claim arising out of that circumstance, either.  Therefore the claims for alleged damage to crops, and loss of the value inherent in the property being certified as “organic” cannot succeed.   The claims for damage to the various roads, taxiways, runway etc  cannot  succeed  either  because  any  damage  allegedly caused  by the plaintiff occurred after the date when they became the owner of those elements of the property.

[47]     The claim which the defendant brings for compensation “for daily breaches of the peace (or apprehensions thereof)” while not involving issues about fixtures can be dealt with at this point.   Because the plaintiffs were entitled to be on the

property which was the alleged cause of the breach of peace or apprehended breach of peace, this cause of action cannot succeed either.   Nor can a claim for compensation for loss of grazing income of organic cattle be successfully brought because the alleged deprivation of grazing which was said to be actionable is not in fact actionable, for the reason that the defendant had removed his cattle from the property because the plaintiff legitimately wanted exclusive possession of the farm.

[48]     As well the defendant seeks compensation for the inability to produce 60 large hay bales of organic hay at $150 per bale which he apparently alleges would have been possible had the property not been sprayed with herbicide.   However, because he had no right to the possession of the property and the fruits of production from the property this claim cannot succeed either.

[49]     Therefore those parts of the counter-claim which make claims arising out of the continued ownership of the fixtures by the defendant will be struck out.  The same result must follow with regard to financial losses allegedly arising from

Mr Ward not receiving the fruits of production of the farm such as grass for organic hay and grazing.  The details of the orders will be set out below.  As well, for the purposes of the application to set aside the statutory demand, it cannot be asserted that the various claims, such as for occupation rent for the hangar building on the property, can be the foundation of a “reasonably arguable” cross-claim for Mr Ward to bring against the plaintiffs.

Mr Ward’s chattels

[50]     There are other chattels which were included in the notice of interlocutory application which Mr Ward filed.   Mr Ward asserts that he has not been able to recover possession of these because of obstruction on the part of the plaintiffs.  The first step is to carry out a brief analysis of the position with regard to the chattels left behind on the farm.

[51]     The first of these is a quantity of hay that the plaintiff claims that he had left over from the previous year’s production and which was left on the property when the plaintiffs took possession of it.  He says that this could not be sold as organic feed as it had been sprayed when herbicide was applied to the farm.  No particulars

are provided as to what cause of action the plaintiff may have in respect of that matter.    But  I  will  defer  further  discussion  of  it  until  I have  considered  more generally the status of other chattels that Mr Ward also makes claims in respect of.

[52]     Mr Ward claims that items left behind include water tanks, organic hay, standing crops and various other unspecified chattels.  I have already found that the buildings and fences are fixtures, as are the water pipes and associated troughs.

[53]     There is authority that a person who leaves chattels on a property in regard to which he has no right of possession or licence to occupy thereby commits trespass.15

In Konskier, builders carrying out repair work left rubbish on a property which caused blockage of a drain and resulting damage.  They were found to be liable in trespass on the claim of the person entitled to possession of the property when the damage was caused.

[54]     Another authority confirms that the person in the possession of the property has the right to remove items from his or her land, which have been left on the property without his/her consent.  In Jones v Gospel it was said: 16

To place or leave a chattel on the land of another without consent is a trespass and the owner of the land is entitled, taking reasonable care in the circumstances, to remove the offending chattel.   In my view the actions of Mr Jones in the present case, so far from being an unlawful interference with Mr White’s chattel, were done lawfully in pursuance of his legal rights to recover possession of plot number 13 and remove from it a chattel which had no longer any right to remain upon the plot.

[55]     Although, the goods might be present upon the land without authority, there is no indication in the authorities that that fact would justify the person in possession of the land damaging the goods in circumstances which would give rise to a claim for trespass to goods or in negligence.  Tying those considerations into the facts of the present case,  if the defendant’s hay had been damaged by spraying as he alleges, then it might be open to him to bring a claim of the type just mentioned.  I observe that even though the evidence is sparse, on the question of the spraying of the hay

the evidence is uncontested.

15 Konskier v B Goodman Limited [1926] 1 KB 421-426.

16 Jones v Gospel [1998] EWCA CIV J0625-12.

[56]     The  position  would  be  more  favourable  to  the  land  occupier  (here  the plaintiffs) if it could be demonstrated that the property which was said to have been damaged   had   been   previously   abandoned   by   the   owner,   the   defendant. Consideration of the rights of land owners who are entitled to vacant possession of the property in circumstances such as this is found in the judgment of Asher J in

Hong Kong and Shanghai Banking Corporation Limited v Erceg.17    The possibility

of obtaining a declaration that the property has been abandoned by the method referred to in that case may be a means by which the plaintiffs can advance their position vis a vis the hay bales left on the property.  But it may not exonerate them from any claims for loss caused prior to the point where any abandonment occurred. But the evidence does  not indicate, in summary,  that the defendant has in fact abandoned his interest in the hay.

[57]     I accept that it is arguable that the defendant has a cross-claim against the plaintiffs for the damage to the hay.  The question of what value such a claim has had will be considered below.  Mr Ward claims that the value of the hay was $9,000, and that, apparently, the hay was a complete loss as a result of being sprayed.

[58]     There remains to be considered the other chattels that Mr Ward has left behind on the property.  By my calculation the maximum value of the aircraft parts etc that have been left on the property is approximately $130,000.  The fact that it is arguable that the defendant owns property to that value which is still located on the plaintiffs’ farm does not translate into a claim that the defendant has a claim for

$139,000 approximately.

[59]     While it is  arguable that  the defendant  has  not  abandoned  any rights  in respect of the property, it does not necessarily follow that the plaintiffs have committed any wrong in respect of those chattels for which the defendant has a reasonable prospect of being compensated.   The defendant’s position is that the plaintiffs have done their best to obstruct him from removing his chattels from the property.  On the other hand, the defendant knew well in advance of the mortgagee

sale that he would have to relinquish possession of the land but nonetheless took no

17 Hong Kong and Shanghai Banking Corporation Limited v ErcegHC Auckland CIV-2010-404-2835,

1 November 2010.

steps to do so.   Further he has had access to the property on numerous occasions since the plaintiffs became entitled to possession but apparently did not take the opportunities provided to remove his chattels.

[60]     When considering whether the defendant has satisfied the Court that he has a counterclaim, set-off or cross demand the appropriate test which the Court should apply is, I consider, that which was formulated by Barker J in Re Hedley (ex parte Milton Bradley (NZ) Limited).18    That is, there has to be a “triable issue” with a “reasonable probability of success”.   As well, it is necessary for the applicant to show that he has a claim of true substance which he genuinely proposes to pursue.19

Assessment in summary of application to set aside bankruptcy notice

[61]     There are two claims which have any prospect of success that the defendant could put forward as the basis for cross-claims against the plaintiffs.

[62]     The first is the claim in respect of the organic hay which was allegedly sprayed with herbicide.  The assessment of the value of that hay is not supported by any  independent  valuation  evidence.     The  Court  is  not  required  to  take  the defendant’s word for it when he says that it is worth $9,000 because of an absence of any opposing deposition from the plaintiffs.  The grounds upon which the plaintiff offers the opinion that the hay is worth $9,000 are not provided.   There is no reference,  for  example,  to  the  defendant  having  himself  being  engaged  in  the business of trading hay or evidence of market prices which were obtained for the sale of hay close to the point at which the damage to the hay is alleged to have occurred.  In summary, the Court is left in the position of doubt: the figure of $9000 may be true or could have been plucked out of the air.  I accept that at this stage of the proceedings Mr Ward is not required to prove on the balance of probabilities that he has a claim and that he suffered loss of $9000.  But he must show that there is substance to the claim - something more than a mere assertion on his part.  Further, the cause of action that he would rely upon has not been formulated even to a basic

stage.

18 Re Hedley HC Auckland B1394/89, 14 December 1989.

19 Sharma v ANZ Banking Group (1992) 6 PRNZ 386 at 388 (CA).

[63]     The second claim would be for damages for conversion of the defendant’s chattels by detaining them on the farm.  This claim could extend to any non-fixtures which remained on the farm and which the plaintiffs were detaining.  The aviation- related chattels which are located in the shed on the property would be one group of these.  It would not, however, be enough for the defendant to show that the plaintiffs had not taken affirmative steps to hand the property to the defendant.   Something more would be required along the lines of establishing that they had prevented the defendant from taking steps to recover his property.

[64]     Were such a claim to go to trial the plaintiffs’ position would be assisted, from a point of view of the strength of the evidence available to them, by the fact that they would seem to have had little to gain by obstructing the defendant from removing his chattels from the building on the property.  They do not appear to be serving any purpose from the plaintiffs’ point of view by remaining on their property and, to the contrary, their continued presence there means that space in the shed is not available for storage of the plaintiffs’ goods. As well, a claim that the plaintiffs were detaining the property is at least arguably inconsistent with the position the plaintiffs have taken in correspondence through their lawyer that they would agree without  prejudice  arrangements  for  removal  of  certain  of  the  chattels  of  the defendant.

[65]     I accept, though, that it is not permissible to resolve disputed questions of fact at the stage where the Court is considering an application to set aside a bankruptcy notice.   The considerations that I have just mentioned about the strength of the evidence would not necessarily be fatal to Mr Ward’s claim that the aviation chattels had been detained.

[66]     But even assuming that there is the claim available to Mr Ward arising out of the detention of his chattels, he has not demonstrated what the value of any claim he might have against the plaintiffs would translate into in terms of the damages that he

might recover.  The Court is likely to be guided by the consideration that: 20

20 Stephen Todd (ed) The Law of Torts in New Zealand (6th ed, Brookers, 2013) at 642 citing Moon v

Raphel (1835) 2 Bing MC 310, 132 ER 122 at 314, 123.

Where the converted goods are restored to the plaintiff, credit must be given for their value, with the result that damages may be nominal.

[67]     It has not been suggested that the aviation-related equipment that remains on the plaintiffs’ property is perishable and likely to depreciate in value over time.

[68]     The difficulties that Mr Ward has apparently encountered in framing claims which meet the minimum of procedural requirements set out in the HCR, further contributes to doubt about whether he has a genuine, triable counterclaim, set-off or cross demand.21

[69]     Taking all of these matters into account, and having regard to the fact that the plaintiffs’ claim in the statutory demand is for the sum of approximately $18,000 there must be real doubt that the defendant has a claim which could be equal to or greater than the judgment debt or the amount that the debtor has been ordered to pay in terms of s 17 of the Insolvency Act 2006.

Other matters that have been raised for consideration

[70]     The defendant has filed an interlocutory application, as already described for an order for recovery of fixtures and chattels and an order for compensation in relation to “the building and other fixtures and for an order requiring the respondent to answer questions contained in the notice to answer interrogatories.”  All aspects of that application other than the order that the plaintiffs answer interrogatories must be dismissed.  In the first place, it is not possible to obtain substantive relief of this kind by way of an interlocutory application.  In the second place the grounds upon which the orders are sought being that the fixtures and chattels were not included in the sale of the property and that the plaintiffs have prevented the defendant from using and enjoying the building and other fixtures are unsustainable for the reasons I have set out earlier in this judgment.  Those parts of the application are to be struck out.

[71]     The defendant has applied for summary judgment on his counter-claim but in the light of the Court’s conclusion that none of the claims in the counter-claim

amount to a reasonable cause of action, that application is dismissed.

21 Clark v UDC Finance Limited [1985] 2 NZLR 636 (HC).

[72]    The defendant’s application for orders directing the plaintiffs to answer interrogatories serve no purpose in the light of the fact that any extant pleadings pursuant to which he seeks judgment against the plaintiffs have been struck out, and accordingly that application, too, is dismissed.

[73]     As to the applications that the plaintiffs bring, I have already dealt with the application for order striking out the counter-claim.  The plaintiffs seek an order for security for costs against Mr Ward but having regard to the fact that the remaining claims that he brings are now at an end there would be no purpose in making such an order and their application as it concerns that order is dismissed.

[74]     The  plaintiffs  seek  an  order  for  “forfeiture  of  chattels  remaining  at  the property at 65 Kelly Road, Mercer”.   No submissions were made to me as to the basis upon which such an order can be made.  No analysis of the rights of the parties which would justify the making of such an order was put forward.  I cannot see any basis upon which it would be open to the Court to make such an order and therefore that application is dismissed.

Conclusion

[75]     The time is now long past when the parties need to extricate themselves from this dispute.  The key issue is the removal of Mr Ward’s remaining chattels.  There have been attempts in the past to facilitate the removal of Mr Ward’s chattels from the farm property.  They have fallen to the ground amongst mutual recriminations that one side or the other has not kept to the arrangements agreed on.  There are risks to the parties on each side from this dispute continuing.   From the plaintiffs’ perspective, any suggestion that their actions may have deprived Mr Ward of his chattels could possibly found an application for damages, particularly if such a claim was formulated following professional advice.  On the other hand, if Mr Ward does not take advantage of opportunities to remove his chattels he may find himself faced with a declaration that he has abandoned them which was the remedy that was

granted in the case of Hong Kong and Shanghai Bank v Erceg.22

22 Hong Kong and Shanghai Banking Corporation Limited v Erceg, above n 17.

[76]     One of the issues that seems to have arisen in this case is that the parties cannot agree on what would be a reasonable amount of time for Mr Ward to have to undertake removal of his aviation-related chattels.   If, unavoidably, the Court ultimately had to make findings on the matter, opinion evidence from someone such as an experienced cartage contractor might be of assistance in establishing what a reasonable time would be.   Such evidence heard together with observations of a credible  observer  of  what  transpired  if  a  further  opportunity  was  provided  to Mr Ward to remove his chattels could go some of the way towards assisting the Court to decide whether one or both of the parties had taken an unreasonable stance concerning removal of the remaining chattels from the farm.

[77]     The defendant’s application for an order setting aside a bankruptcy notice is dismissed.

Costs

[78]     The parties should confer on the matter of costs and if they are unable to agree they are to file memorandum not exceeding five pages on each side within ten

working days of the date of this judgment.

J.P. Doogue

Associate Judge