Cookson v Simmons HC Wellington CIV-2011-485-283
[2011] NZHC 1081
•4 August 2011
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2011-485-283
BETWEEN VINCENT BLAIR COOKSON AND BRUCE HOWARD JENSEN AS TRUSTEES OF VINCENT COOKSON TRUST
Plaintiffs
ANDLORNE PERRY SIMMONS, NICOLE LYNLEY SIMMONS AND LIAM MICHAEL O'KEEFFE
Defendants
Hearing: 22 June 2011
(Heard at Wellington)
Counsel: G. Dewar - Counsel for Plaintiff
K. Sullivan - Counsel for Defendant
Judgment: 4 August 2011 at 3:00 PM
JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL
This judgment was re-issued by Associate Judge D.I. Gendall on 4 August 2011 at
3.00 pm under r 11.5 of the High Court Rules.
Solicitors: Thomas Dewar, Solicitors, PO Box 31-240, Lower Hutt
Duncan Cotterill, Solicitors, PO Box 10376, Wellington
VB COOKSON AND BH JENSEN AS TRUSTEES OF VINCENT COOKSON TRUST V LORNE PERRY SIMMONS, NICOLE LYNLEY SIMMONS AND LIAM MICHAEL O'KEEFFE HC WN CIV-2011-485-283 4
August 2011
Introduction
[1] Before the Court is a summary judgment application by the plaintiffs seeking a modest sum for interest and costs from the defendants. That application is opposed by the defendants.
[2] The plaintiff’s principal claim in this proceeding has now been resolved but a reasonably small issue concerning that additional claim for interest and costs remains.
Background
[3] Some time ago, the plaintiffs and the defendants were in a partnership called “The Next Door II Partnership” which developed a property at Sydney Street, Petone as a carparking and warehouse facility. After development, the property was occupied by interests associated with the defendants as to the carpark, and by a company controlled by the plaintiff, Virtual Plumbing Limited (Virtual Plumbing) as to the warehouse facility. Virtual Plumbing conducted its plumbing business from this facility.
[4] Issues arose between the parties which led to litigation. This was eventually settled under the terms of a Settlement Agreement dated 17 November 2010 (the Settlement Agreement). Under the terms of that settlement, the plaintiffs were entitled to call on the defendants to purchase their interest in the Sydney Street property for an agreed sum which they did on 23 November 2010. The defendants through their solicitor confirmed then that settlement of the purchase would occur on
23 December 2010.
[5] On 15 December 2010, however, the defendants advised that they would not be able to settle on 23 December 2010. At that stage, the first-named plaintiff, Mr Vincent Blair Cookson (Mr Cookson) responded, asking whether he would at least get some income from the premises with respect to late settlement. The plaintiff maintains that its company Virtual Plumbing had vacated the premises it was occupying and Mr Cookson had handed over the keys.
[6] The defendants did not settle on 23 December 2010. This proceeding was commenced on 18 February 2011. In the meantime the plaintiffs had received from the defendants a letter (purported to be dated 15 December 2010 but not received until 7 February 2011) contending that the defendants were not liable to pay interest to the plaintiffs for the delay in settlement because the Settlement Agreement did not provide for it. In addition, this letter claimed that the plaintiffs and Virtual Plumbing had arranged for fixtures and fittings to be removed from the warehouse facility when Virtual Plumbing vacated, which they were not entitled to do. These aspects were disputed by the plaintiffs.
[7] A month after these proceedings were issued on 18 March 2011 a company formed by the defendants, 75 Sydney Street Limited entered into a new contract to purchase the property and completed settlement. The plaintiffs were paid their portion of the purchase price but without interest on 18 March 2011.
[8] As noted above, the plaintiffs now claim interest for the delayed settlement and seek summary judgment for this. The defendants’ position on interest as I have noted above is two-fold. First it claims that the Settlement Agreement/Contract did not provide for interest for late settlement and accordingly it was not payable. Secondly, the defendants contend that they have a valid counter-claim or set-off against any interest claim, in that substantial fixtures and fittings were removed from the warehouse facility either by or at the behest of the plaintiffs and that proceedings seeking recovery of at least $50,000.00 from the plaintiffs or its interests are to be issued.
[9] Finally, the plaintiffs contend here that they should have costs arising from this proceeding and these should be assessed on either an increased or indemnity cost basis. This, it is said, is because the arguments and stance taken by the defendants here as to interest are entirely without merit and the Court should recognise that this litigation arises out of enforcement by the plaintiffs of the Settlement Deed settling earlier litigation between the parties.
Summary Judgment Principles
[10] The application before me is one for summary judgment. It is brought pursuant to r 12.2(1) of the High Court Rules which provides:
12.2 Judgment when there is no defence or when no cause of action can succeed
(1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[11] The principles of summary judgment have been summarised recently by the Court of Appeal in Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26]:
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1; (1986) 1 PRNZ 183 (CA), at p 3; p 185. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331; [1979] 3 WLR 373 (PC), at p 341; p 381. In the end the Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
Counsels’ Submissions and My Decision
[12] The onus here is clearly on the plaintiffs in their present summary judgment application to satisfy the Court that the defendants have no defence to their claim for interest.
[13] As I have noted, the defendant’s initial position on this interest claim is to contend that the Settlement Agreement did not provide for interest for late settlement and accordingly it is not payable.
[14] This stance clearly relies upon the terms of the Settlement Agreement. That
document has appended to it a draft Agreement for Sale and Purchase marked “A”.
It is the Eighth Edition 2006(2) of the Agreement for Sale and Purchase standard form published by the Auckland District Law Society to which had been added certain additional conditions numbered 1 to 6. The standard Agreement, however, had not been fully photocopied it seems as the reverse sides of certain pages were not included. That said, the standard default interest provisions of this Agremeent for Sale and Purchase form were not included in the document appended as the definitions, notices and interpretation section comprised in clause 1 had been left out.
[15] It is for this reason, according to Mr Dewar for the plaintiffs, that the plaintiffs in their statement of claim sought interest only at the Judicature Act 1908 rate.
[16] The plaintiffs’ contention is that the defendants’ stance and approach here is pure opportunism on its part and on the part of their nominee purchaser 75 Sydney Street Limited when the plaintiffs presented a slightly different contract for the purchase of the property with its relevant interest provisions.
[17] The plaintiffs contend they are entitled to interest from 23 December 2010 at which point they should have received their share of the sale proceeds from the defendants amounting to $216,680.00. This amount was paid to them only some three months later on 18 March 2011 following ultimate settlement of the sale to 75
Sydney Street Limited.
[18] Calculation of the interest concerned is provided by Mr Dewar for the plaintiff at the rate of 7.5% p.a. for this 84 day period. It amounts to $3,739.68.
[19] Despite the arguments on behalf of the defendants that interest was not payable under the strict terms of the Settlement Agreement, I accept the arguments advanced to me by Mr Dewar for the plaintiff that this is not the case. Clearly, in my view, the Settlement Agreement intended that the standard Auckland District Law Society Agreement for Sale and Purchase form would be used and this provides for interest on delayed settlement. That interest is now sought at the Judicature Act rate
of 7.5% p.a., (as no default interest rate was specified in the Agreement itself) in my view, is entirely appropriate here.
[20] The defendants as I see it have no proper defence to the interest claim based on this first ground of opposition.
[21] This leaves for consideration the second ground of defence advanced here which is that the defendants and their associated parties have some form of counter- claim or set-off against the plaintiffs and their interests (in particular Virtual Plumbing) for the unlawful removal of fit-out fixtures and fittings from the warehouse facility prior to final settlement of the sale, and that recovery of something over $50,000.00 is sought under this counterclaim/set-off.
[22] In considering the prospect of an equitable set-off, the following statement of the Court of Appeal in Grant v NZMC [1989] 1 NZLR 8 at 12-13 is a useful starting point:
The principle is, we think, clear. The defendant may set-off a cross-claim which so affects the plaintiff ’s claim that it would be unjust to allow the plaintiff to have judgment without bringing the cross-claim to account. The link must be such that the two are interdependent: judgment on the one cannot fairly be given without regard to the other; the defendant’s claim calls into question or impeaches the plaintiff ’s demand. It is neither necessary, nor decisive, that claim and cross-claim arise out of the same contract.
[23] In Moorhouse Kitchens and Appliances Limited v Nelson Kitchen Appliances Limited HC Christchurch CIV-2010-409-2175, 7 December 2010 Wylie J commented on this aspect at [32]:
An equitable right is not limited to liquidated cross-claims [unlike legal set-off], but extends to unliquidated claims for damages.
[24] While the position as to the existence of an equitable set-off is settled law, generally there must be a claim to be set off against a claim between the same parties: Hamilton Ice Arena Ltd v Perry Developments Ltd [2002] 1 NZLR 309 (CA) at [8]. As Tipping J, for the Court said in Hamilton Ice Arena at [8]-[9]:
The need for identity of parties is also consistent with the proposition that the cross- claim is regarded in equity [as] fully or pro tanto extinguishing the plaintiff's right to judgment on the claim. The concept of extinguishment is difficult if the cross-claim is made by a different party.
…While we would not wish to rule out the possibility that in some unusual circumstance it might be appropriate to allow equitable set-off where there is no identity of parties, any such circumstance (other than one justifying the lifting of the corporate veil) would have to be consistent with the extinguishment rationale. In this case, there being no basis for lifting the corporate veil and equating the Speirs brothers with Hamilton Ice, we are of the view that the lack of identity of parties is in the circumstances fatal to Hamilton Ice's claim to set off the money owing by Perry to the Speirs brothers against the money which it owed Perry for rent.
[25] In Hamilton Ice Arena, due to the appellant’s failure to pay rent owing, the respondent as landlord re-entered the appellant’s premises and forfeited the lease. The appellant contended that that entry was unlawful as the respondent owed money for wages to the appellant’s shareholders and directors for work previously done on an entirely different building owned by the respondent. The Court was not satisfied that there was sufficient identity of the parties to enable the appellant to argue that the money owed to its shareholders and directors operated as a set-off with respect to the rent it owed to the respondent. At [41] Tipping J noted:
The two contracts here – the lease and the refurbishment contract – concerned different premises in different cities. One involved rent, the other wages. They really have no practical or conceptual linkage at all. The fact that the money due to the Speirs brothers was intended by them to be used to discharge Hamilton Ice’s obligations under the lease is by no means sufficient for equitable set-off. In almost all cases of money cross-claims one party can say to the other, if you had paid me I would have been able to pay you. If that were a sufficient justification for set-off, the difference between set-off and counter claim would be blurred almost to the point of extinction. An issue such as the present is in the end one which turns on a combination of analysis and impression. The trial Judge came to the view that the claims were not sufficiently linked. We cannot say he was wrong; indeed we agree with his conclusion. This ground of appeal must therefore fail.
[26] In considering similar aspects in Le Fleming v Awataieri Holdings Limited HC Dunedin CIV-2009-412-848, 19 March 2010 Fogarty J provided some further clarification at [20]-[21]:
The criteria of “link”, and “sufficient close connection” are standards. Their application turns on a “combination of analysis and impression” per Tipping J in Hamilton Ice: [41]…
The ultimate issue is unconscionability.
[27] In the present case, Mr Sullivan for the defendants submits this is a clear case where it would be unjust to give judgment for the plaintiff without bringing the cross claim for damages to the premises in question and removed fixtures to account. The two claims he says are interdependent. They arise out of the settlement agreement between the parties and Virtual Plumbing and steps taken at the instigation of the
first-named plaintiff Mr Cookson to have items of fit-out removed and for the premises allegedly to be rendered untenantable.
[28] He goes on to submit that summary judgment should be refused because there are defences available to the defendants as well as the related company which should be determined before any judgment could be properly given on the plaintiff’s claim.
[29] Mr Sullivan confirms that the defendants have finalised the form of their counter-claim/set-off claim against both the plaintiff and Virtual Plumbing. A copy of the claim was attached to his submissions before me. As I understand it, the claim is about to be filed in the District Court. Mr Sullivan contends that as the plaintiffs only remaining claim in this Court is for interest and costs, this should also be resolved as part of those District Court proceedings.
[30] In response, Mr Dewar for the plaintiffs first, raises a complaint about mutuality here. He notes that Virtual Plumbing the tenant that caused damage in vacating the premises and allegedly removed fixtures improperly is a separate entity from the plaintiffs and therefore there is no mutuality here. On this he referred to a recent decision of Associate Judge Matthews in ASB Bank v Hall, HC Auckland
8/4/2011, CIV-2010-404-6381 where summary judgment was granted to a plaintiff rejecting set-off in part on mutuality grounds.
[31] Next, Mr Dewar for the plaintiffs contends that in any event the defendants’ set-off defence here must fail as the Settlement Agreement and attached Contract bar set-off. On this, he referred to the Agreement for Sale and Purchase form appended to the Settlement Agreement which he submitted required settlement on the ultimate sale without deduction or set-off. Even if there may be an arguable counter-claim against the plaintiffs here, Mr Dewar argued there was no right to equitable set-off here. On this he referred again for support to the decision in ASB Bank v Hall.
[32] Although clearly here the defendants are required initially to put before the Court sufficient material to show that they have a claim by way of equitable set-off that so affects the claim of the plaintiffs it would be unjust to decide one claim
without taking the other into account, this being a summary judgment application, the final onus must still rest on the plaintiffs to show that the defendants have no arguable defence in the sense that there is no real question to be tried.
[33] In the present case I am of the view that the overarching reality is that there is a reasonable level of interconnectivity between all the businesses mentioned in this judgment and operated by members of the plaintiff/defendant partnership, and some intermingling of their affairs. As I see the position, it is arguable here that the defendants may have an equitable set off between the claim against them and the various claims against Virtual Plumbing and the plaintiffs. A reasonable argument exists that what is a rather sorry saga between all these parties ideally should be unravelled properly rather than considering just one aspect. To look here at the issue of interest on the delayed sale settlement in isolation might on one view lead to some possible injustice.
[34] Notwithstanding these considerations, I am mindful that the plaintiffs’ summary judgment claim here is for what is a modest amount of interest plus a claim for costs. I accept Mr Dewar’s argument for the plaintiffs that the contractual arrangements between these parties bar any set-off being made against the interest claimed.
[35] That said and although in a perfect world a sensible resolution of all matters outstanding between these parties might be desirable, the plaintiffs, in my view, have done enough here to show that the defendants have no arguable defence to the default interest claim against them given the contractual arrangements between the parties.
Conclusion
[36] It follows therefore that the plaintiffs’ present summary judgment application
succeeds.
[37] No dispute was raised on the part of the defendants as to the plaintiffs’
interest calculations here. Summary judgment is therefore granted to the plaintiffs
against the defendants and an order now made that the defendants are to pay to the plaintiffs interest on the sum of $216,680.00 at 7.5% per annum from 23 December
2010 up to 18 March 2011 being 84 days and amounting to the sum of $3,739.68.
[38] As to costs on this proceeding, the plaintiffs have succeeded and are entitled to an order for costs. Mr Dewar for the plaintiffs indicated that they seek actual costs totalling some $17,154.00 as opposed to scale 2B costs and disbursements which total $9,249.33.
[39] I see no reason under the circumstances here why costs other than the normal scale 2B costs should be awarded.
[40] The plaintiffs are entitled to an order for 2B costs against the defendants on this proceeding totalling $8,084.00 together with disbursements totalling $1,165.33.
‘Associate Judge D.I. Gendall’
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