Edwards v Edwards

[2012] NZHC 1630

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2011-488-822 [2012] NZHC 1630

IN THE MATTER OF     the High Court Rules and Property

(Relationships) Act 1976

BETWEEN  IRENE ANNE EDWARDS Plaintiff

ANDSIDNEY LUCIEN EDWARDS First Defendant

ANDEDWARDS LANDS LIMITED Second Defendant

ANDSIDNEY LUCIEN EDWARDS AND IRENE ANNE EDWARDS AND WAYNE MICHAEL WEBER (AS TRUSTEES OF THE SID AND IRENE EDWARDS FAMILY TRUST)

Third Defendant

ANDSIDNEY LUCIEN  EDWARDS, WAYNE MICHAEL WEBER AND GEORGE MIDDLETON PALMER  (AS TRUSTEES OF THE S L EDWARDS FAMILY

TRUST)

Fourth Defendant

Hearing:         5 June 2012

Appearances: C J Cook for Plaintiff

D R James for Defendants

Judgment:      11 July 2012

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on   11 July 2012   at 9:30am

pursuant to Rule 11.5 of the High Court Rules.

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

Registrar/Deputy Registrar

EDWARDS V EDWARDS HC WHA CIV-2011-488-822 [11 July 2012]

Solicitors:

Cook Westenra Limited (C J Cook), P O Box 127 Whangarei 0140, for Plaintiff

Email:   [email protected]

Palmer Macauley (D R James) P O Box 576 Kerikeri, for Defendants

Email:   [email protected]

[1]      The  plaintiff  has  applied  for  summary  judgment.     She  seeks  specific performance of heads of agreement made on 7 October 2010 in a judicial settlement conference in the Family Court at Kaikohe.  Under r 12.2 of the High Court Rules the court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no arguable defence to a cause of action in the statement of claim.

[2]      Matters raised in the notice of opposition include these:

(a)      The proceeding is an abuse of process or is outside the High Court’s jurisdiction as the Family Court is the only appropriate court to determine the matters in question and there is a pending application for similar orders in the Family Court.

(b)There are matters in dispute between the parties and the defendants have defences to the substantive proceeding. Among the points raised is that the heads of agreement document does not comply with the formal  requirements  of  s  21F  of  the  Property  (Relationships) Act

1976.

(c)       The court may set the agreement aside under s 21J of the Property

(Relationships) Act on the grounds of serious injustice.

(d)The relief sought is premature as the right to payment is conditional on the sale of the property called “the Lake Block” and the plaintiff has not fulfilled her obligations under the heads of agreement.

[3]      The main questions are:

(a)       Is the proceeding an abuse of process for duplication of proceedings?

(b)      Are the heads of  agreement enforceable?

Background

[4]      The plaintiff and the first defendant were married on 29 August 1970.  They separated on 17 April 2007.  They were farmers at Rangiahua, between Horeke and Okaihau.  Most of their assets were held in trusts and in a company.  The first trust is the S L Edwards Family Trust.  It was established in 1981.  The trustees are the first defendant, a Kerikeri accountant, and a Kaikohe lawyer.1     The plaintiff and the first defendant are among the discretionary beneficiaries of the trust.

[5]      The second family trust is the Sid and Irene Edwards Family Trust.  It was established in  2002.   The trustees  are the plaintiff, the first  defendant,  and  the Kerikeri  accountant.     The  plaintiff  and  the  first  defendant  are  among  the discretionary beneficiaries of the trust.

[6]      A company, Edwards Lands Ltd, owns the stock, plant and equipment and the land for the farming operation.  Most of the farm is at Rangiahua but there is also another block called the Lake Block, near Lake Omapere, Okaihau.   There are

50,000 shares in Edwards Lands Ltd;   23,291 shares are owned by the S L Edwards family trust and 26,659 by the Sid and Irene Edwards family trust.  Both the plaintiff and the first defendant are directors. They hold the remaining 50 shares.

[7]      There is also a bach property at Hihi, near Mangonui, which is owned by the Sid and Irene Edwards Family Trust.   The parties also own chattels in their own names. These appear to be relatively inconsequential.

[8]      In 2009 the plaintiff brought proceedings in the Family Court for division of relationship property under the Property (Relationships) Act, and also applied for orders under s 182 of the Family Proceedings Act 1980.   In these Family Court

proceedings the plaintiff and the first defendant were the only parties.

1      He has since retired and been replaced.

[9]      There was a judicial settlement conference in the Family Court at Kaikohe on

7 October 2010, where the parties signed a document which provided:

The parties have agreed as follows: [1]          Relationship property

(a)      The parties’ 50 shares in Edwards Lands Ltd shall be the

separate property of Mr Edwards upon settlement.

(b)       Mr Edwards shall retain all chattels in the family home save for the glass topped hall table, pine unit and outside seat which shall be the separate property of Mrs Edwards.

(c)       Mrs Edwards shall retain as her separate property all chattels in the bach.

(d)       Mr Edwards shall retain the boat and dinghy at Hihi as his separate property and shall pay to Mrs Edwards $8000 by way of adjustment on settlement date.

(e)       Mrs Edwards shall assign to Mr Edwards the debt owed by the Sid and Irene Family Trust of $143,708.

(f)       Mrs Edwards shall retain as her separate property the Mazda

626 motor vehicle.

(g)       Each party to keep bank accounts in their own respective names as their separate property.

[2]      Trusts

(a)      The  Edwards  Lands  Ltd  shareholding  trusts  shall  pay  to

Mrs Edwards the sum of $1.530 million Dollars as follows: (i)      $1,000,000 on sale of the Lake and Hihi blocks.

(ii)      $530,000  at  $26,500  per  annum  over  20  years interest free, provided that there is no default, each payment due on the anniversary of settlement date.

(iii)      Security  for  the  $530,000  and  interest  rate  for default to be agreed.

(b)       To provide for the payment in 2(a)(i) above the Lake and Hihi farm blocks shall immediately be marketed for sale in consultation and on terms agreed.

(c)       Settlement date for the payments referred to in paras 1(d) and 2(a)(i) shall be settlement day for sale of the Lake and Hihi Blocks.

(d)      Mrs  Edwards  to  resign  as  Trustee  in  Both  trusts  and relinquish all interest, as Beneficiary in same.

[3]       The  above  agreements  are  conditional  upon  the  trustees  of  the S.L. Edwards  Family  Trust  and  the  Syd  &  Irene  Family  Trust consenting to the provisions of Para 2 above within 14 days, Mr and Mrs Edwards consenting today.

[4]      A comprehensive s. 21 agreement and variation of trust deed documentation shall be drawn and executed by the parties and trustees.

[5]      Leave reserved to return to the Court as to implementation. [6]     Adjourned to R/list 6 weeks.

[7]      Edwards Lands Ltd to meet Mrs Edwards Legal Aid charges.

[10]     In submissions the document was described as a heads of agreement.

[11]     Their lawyers witnessed the parties’ signatures, but the document does not have any certificate under s 21F(5) of the Property (Relationships) Act signed by either lawyer.   The presiding judge made a minute recording what the parties had signed but it is common ground that his minute is not an order dividing property under the Property (Relationships) Act and is not an order granting relief under s 182 of the Family Proceedings Act.   It is also agreed that the other trustees gave their consents to the arrangements made.

[12]     The defendants’ lawyer prepared a relationship property agreement and sent it to the plaintiff’s lawyer for consideration, but the parties have not signed a comprehensive agreement under paragraph 4 of the heads of agreement.

[13]     The first defendant has paid the plaintiff $8,000 under paragraph 1(d) and the third and fourth defendants have paid the plaintiff two payments of $26,500 each under paragraph 2(a)(ii).

[14]     The first defendant counted on the sales of the Hihi property and the Lake Block raising enough to cover the payment of $1,000,000 to the plaintiff under paragraph 2(a)(i). The plaintiff is living at the Hihi property and has agreed to take it an agreed value of $320,000.     A local authority rating valuation had ascribed a capital  value  of  $680,000  for  the  Lake  Block,  but  marketing  efforts  have  not

succeeded in obtaining any offers to buy at this value.    The best offer made was from an adjoining neighbour - $550,000.  A report from a registered valuer supports this as the current market value as at November 2011.  The first defendant proposed that this drop in value be shared by the plaintiff agreeing to take a reduction of

$75,000.  After the plaintiff agreed to this, the neighbour dropped his offer further to

$437,000.   The Lake Block has not sold.   I was advised that in May 2012 the neighbour made a fresh offer to pay $550,000 but withdrew that offer before the hearing.

[15]     The plaintiff applied to the Family Court for orders to implement the heads of agreement.  When the application was called on 7 September 2011, the Family Court Judge gave directions in which he said:

I have pointed out that the agreement is neither a s 21 agreement or an order of the Court.   Ms Cook seeks to have the agreement treated as a s 21 agreement, or to seek enforcement of the agreement using paragraph 5 of it, that is leave reserved as to implementation.    Mr Edwards, represented by Mr James, rejects that.

[16]     The plaintiff has filed further applications in the Family Court:

(a)      An application under s 21L of the Property (Relationships) Act to enforce the heads of agreement;

(b)An application to join the trustees and Edwards Lands Limited in the proceeding; and

(c)      An application under s 21H of the Property (Relationships) Act that the heads of agreement have effect notwithstanding non-compliance with the requirements of s 21F.

[17]     The plaintiff’s applications are still pending in the Family Court but  the plaintiff has asked for them to be put on hold while she pursues her summary judgment application in this proceeding.

[18]     While the plaintiff has sought specific performance generally, the particular orders she seeks in the statement of claim are for payment of $605,000 (being the

$1,000,000 in paragraph 2(a)(i) of the heads of agreement, less $320,000 for Hihi and less $75,000 as agreed) and for transfer of the Hihi block into her sole name, as well as costs and interest.    It appeared that payment under the orders should not await the sale of the Lake Block.

[19]     At the hearing I asked the parties to submit draft orders, if I were to find in the plaintiff’s favour.   The draft submitted for the plaintiff provides among other things:

(a)       Transfer of the Hihi property to the plaintiff for $320,000;

(b)      Directions for marketing of the Lake Block, with a listing price of

$595,000, the plaintiff to be informed as to sales process, Edwards Lands Limited to accept any written offer to buy the block (being within 25% less than $550,000 or more), authorising the Registrar of the Court to sign any agreement and further conveyancing documents if the company refused, the proceeds of sale to be paid to the plaintiff, the balance to make up $1,000,000 to be paid on settlement of the sale, and to come back to court if there is no sale within six months;

(c)       Security  for  the  annual  payment  of  $26,500  to  be  a  mortgage registered against the titles to the Rangiahua farm; and

(d)Interest on default to be the ASB bank home loan default rate as varied from time to time.

[20]     The first defendant did not object to (a) or other provisions, but did take issue with (b) – (d).

Is the proceeding an abuse of process for duplication of proceedings?

[21]     The first defendant says that he faces proceedings in both the Family Court and this court to enforce the heads of agreement.  There is well-established authority against concurrent proceedings on the same subject matter between the same parties being run in different or the same courts:   Thames Launches Ltd v Trinity House

Corporation,2     Royal Bank of Scotland v Citrusdal Investments Ltd,3     Registered Securities   Ltd   v   Yates,4      Otis   Elevator   Company   Ltd   v   Linnell   Builders Ltd5 and Cowley v Shortland Publications Ltd.6     Such double proceedings are an abuse of process under r 15.1(1)(d).

[22]     Courts exercising civil jurisdiction, the High Court and the District Court, have overlapping jurisdiction with the Family Court for the enforcement of agreements to divide property following the break-up of a marriage.   The High Court’s jurisdiction arises generally under s 16 of Judicature Act 1908.  The District Court’s civil jurisdiction under s 29 of the District Courts Act 1947 is subject to claims for no more than $200,000.   It has an equitable jurisdiction and may give

equitable relief.7   Before the reforms under the Property (Relationships) Amendment

Act 2001, the Family Court had jurisdiction to enforce s 21 agreements by way of applications for division of property which sought orders in terms of the agreement.8

The Court can make orders dividing property under s 25, including the panoply of orders available under s 33. The position remains the same following the reforms. By parallel reasoning an agreement to settle a claim under s 182 of the Family Proceedings Act could be the subject of an application for relief under s 182 seeking orders in terms of the agreement. Under s 16 of the Family Courts Act 1980, the Family Court has the ancillary jurisdiction of the District Court under s 41 of the District Courts Act.   This allows the Family Court to give equitable relief for any matter that is within its jurisdiction.

[23]     When the plaintiff applied to the Family Court for orders to implement the heads of agreement, she was invoking an undoubted jurisdiction of the Family Court. Her later applications to join other parties and to seek relief under s 21L of the Property (Relationships) Act were also within the jurisdiction of that court, with the

possible exception of the joinder of Edwards Lands Ltd.  It is not clear that there is a

2      Thames Launches Ltd v Trinity House Corporation (Debtford Strond) [1961] 1 Ch 197.

3      Royal Bank of Scotland Ltd v Citrusdal Investments Ltd [1971] 1 WLR 1469.

4      Registered Securities Ltd (In Liquidation) v Yates (1991) 5 PRNZ 68.

5      Otis Elevator Co Ltd v Linnell Builders Ltd (1991) 5 PRNZ 72

6      Cowley v Shortland Publications Ltd (1991) 5 PRNZ 76.

7      District Courts Act 1947, ss 34 and 41.

8      Fisher  on  Matrimonial  and  Relationship  Property  (looseleaf  ed,  LexisNexis)  5.14,  citing Thaisen v Thaisen (1981) 4 MPC 198, Bishop v Bishop (1981) 4 MPC 17, Newport v Cook (1982) 1 NZFLR 439, Belt v Belt (1989) 5 FRNZ 258 and Wicksteed v Wicksteed [2002] NZFLR

28. See also P E S v D N S (2006) 25 FRNZ 863 at [20]-[24].

claim available against the company outside the heads of agreement.   However, Mr James points out that Mr Edwards might be compelled to use his powers as a director to make the company provide what it promised.

[24]     The plaintiff objects that there is no overlap.  She says that while the subject matter is the same, different relief is sought because in the Family Court she is not asking for property to be sold or for the applications to be determined substantively. The plaintiff disclaims seeking orders under s 25 and 33 of the Property (Relationships) Act.   The issue in the Family Court is said to be the status of the agreement, which the plaintiff seeks to have clarified. That is said to be different from the application for specific performance in this court.

[25]     The plaintiff ’s applications in the Family Court cannot be read as narrowly as the plaintiff maintains. Her original applications of November 2009 sought general orders under the Property (Relationships) Act (encompassing relief under ss 25 and

33) and orders under s 182 of the Family Proceedings Act.  Those applications are still pending.   Her application of 20 October 2011 expressly seeks orders to implement terms of the agreement of 7 October 2011, including orders for payment and for specific performance in much the same terms as sought in this proceeding. Her applications of 14 November 2011 to join parties and to give effect to the agreement under s 21H are also directed at implementation of the agreement.

[26]     In any event, the plaintiff’s argument that her case in the Family Court is confined to determining the status of the agreement does not help her.  The validity of the agreement is crucial to her claim in this court.  She cannot obtain an order for specific performance unless she first establishes that she has an enforceable agreement. The plaintiff has raised the same issue in both proceedings.

The purpose of the rule against duplicate proceedings is primarily to protect a party from having to litigate the same matter in separate proceedings: nemo debet bis vexari pro una et eadem causa.  So far the only person who is subject to duplicate proceedings is the first defendant.  The other defendants have not been joined in the Family Court proceedings.  That court has still to decide the joinder application.  It might decline joinder on the grounds that the proposed respondents are already

parties to this proceeding.   Nevertheless, exact identity of parties is not essential: see Thames  Launches  Ltd  v Trinity  House  Corporation.9      It  is  undesirable  that proceedings to enforce the heads of agreement should be brought in two courts at the same time. The plaintiff needs to choose which court she will sue in.

Are the heads of agreement enforceable in this court?

[27]     There are two aspects to the validity of the heads of agreement:

(a)       Do the heads of agreement meet the requirements of the Property

(Relationships) Act?

(b)      Are they enforceable under the general law?

Do the heads of agreement meet the requirements of the Property (Relationships) Act?

[28]     For it to meet the requirements of an agreement to settle differences under s

21A of the Property (Relationships) Act, the heads of agreement needed certificates under s 21F(5) by each lawyer witnessing a party’s signature that the lawyer had explained to their client the effect and implications of the agreement.  Without those certificates the agreement is void, unless the court makes an order under s 21H that the agreement is to have effect, notwithstanding non-compliance.10    There are no certificates.  The agreement is void as a section 21A agreement.  No order has been made under s 21H.  None is sought in this proceeding.

[29]     It  is  common  ground  that  although  the  agreement  also  settles  claims  in respect of trusts (a claim outside the Property (Relationships) Act), the trusts part of the agreement cannot be severed from the relationship property part.  They are an

entire package.

9      Thames Launches Ltd v Trinity House Corporation (Debtford Strond), above n 1, at 208

per Buckley LJ: “I think, looking at the reality of the situation, that the parties are the same in both sets of proceedings.”

10     Property (Relationships) Act 1976, s 21F(1).

[30]     The plaintiff accepts that she cannot enforce the agreement in the Family Court, at least not unless she obtains an order under s 21H (which she has applied for).  But she says that she can sue on the agreement in this court, notwithstanding non-compliance with s 21F.  Her argument is that in this court the agreement is not a s 21A agreement and that this court has power to enforce the agreement notwithstanding the provisions of the Property (Relationships) Act.

[31]     The agreement does purport to settle differences concerning property owned by the plaintiff and the first defendant.  It provides for a division of all relationship property.  The plaintiff had brought an application under the Property (Relationships) Act to obtain a division of property following separation.  The agreement was made in  the  course  of  that  proceeding  at  a  judicial  settlement  conference.    It  is  an agreement under s 21A.  The fact that it does not comply with s 21F does not take it out of s 21A.

[32]     The rules for the validity of s 21A agreements are the same in this court as in the Family Court.  That point is reinforced by s 4(4) of the Property (Relationships) Act:

(4)       Where, in proceedings that are not proceedings under this Act, any question relating to relationship property arises between spouses or partners, or between either or both of them and any other person, the question must be decided as if it had been raised in proceedings under this Act.

[33]     This court has no more power than the Family Court to enforce a non- compliant agreement under s 21A.  The absence of certificates under s 21F(5) is just as fatal to enforcement proceedings in this court as it is in the Family Court.

Are the heads of agreement enforceable under the general law?

[34]     Section 21G saves the general law as to the validity of relationship property agreements:

Section 21F does not limit or affect any enactment or rule of law or of equity that makes a contract void, voidable, or unenforceable on any other ground.

[35]     Paragraph  4  of  the  heads  of  agreement  requires  a  comprehensive  s  21 agreement and variation of trust documentation to be drawn and executed.  Here the question is whether the arrangements the parties made at the settlement conference are an enforceable agreement.   In cases where parties enter into an informal agreement, but intend to deal with the matter later by a formal agreement, there are different possible outcomes.  In Masters v Cameron, the High Court of Australia set

out three possibilities:11

Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases. It may be one in which the parties have reached finality in arranging all the terms  of  their  bargain  and  intend  to  be  immediately  bound  to  the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.

As to the third possibility, the court said:12

Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own: Governor & c. of the Poor of Kingston- upon-Hull v. Petch ... The parties may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document, as in Summergreene v. Parker ... or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed. These possibilities were both referred to in Rossiter v. Miller ... Lord O'Hagan said: "Undoubtedly, if any prospective contract, involving the possibility of new terms, or the modification of those already discussed, remains to be adopted, matters must be taken to be still in a train of negotiation, and a dissatisfied party may refuse to proceed. But when an agreement embracing all the particulars essential for finality and completeness, even though it may be desired to reduce it to shape by a solicitor, is such that those particulars must remain unchanged, it is not, in my mind, less coercive because of the technical formality which remains to be made" ... And Lord Blackburn said: "parties often do enter into a negotiation meaning that, when they have (or think they have) come to one mind, the result shall be put into formal shape, and then (if on seeing the result in that shape they find they are agreed) signed and made binding; but

that each party is to reserve to himself the right to retire from the contract, if, on looking at the formal contract, he finds that though it may represent what he said, it does not represent what he meant to say. Whenever, on the true construction of the evidence, this appears to be the intention, I think that the parties ought not to be held bound till they have executed the formal agreement"  ...  So,  as  Parker  J.  said  in  Von  Hatzfeldt-Wildenburg  v. Alexander ... in such a case there is no enforceable contract, either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract.

[36]     McMorland’s Sale of Land13  notes a fourth case – where the parties are content to be bound immediately and exclusively by the terms they have agreed upon whilst expecting to make a further contract in substitution for the first, containing by consent additional terms.

[37]     The plaintiff contends for the first case in Masters v Cameron, the defendants for the third.   To be immediately binding, the heads of agreement must meet the requirements of an intention to be bound immediately and an agreement or a means of agreement on every term which is legally essential to the formation of a contract and was regarded as essential to the particular bargain.14

[38]     There are three aspects that count against the heads of agreement having immediate effect:

(a)      the provision for matters to be agreed in the future under paragraphs

2(a)(iii) and 2(b);

(b)      the absence of the other trustees;  and

(c)       the absence of certificates under s 21F(5).

[39]     At the hearing Ms Cook said that absence of agreement as to security and default interest rate was not fatal because the plaintiff could take by the default provisions under the general law.  That is, in the absence of payment, the plaintiff could sue and seek interest under the court’s discretionary power to award interest under section 87 of the Judicature Act and could take security by way of charging

order after judgment.   That purported waiver does not answer the point that the parties  had  not  adequately  addressed  these  matters  in  the  heads  of  agreement. Instead the fact that the waiver was offered shows up the absence of agreement.  The plaintiff’s draft order sets out provisions for security, interest and terms of sale.  The defendants protest that they are terms that they have not agreed to.  They say that security should be given over the trustees’ shares in Edwards Lands Ltd, not over the land owned by the company, so as not to inhibit the company’s ability to raise finance.  They say that the default interest proposal is arbitrary.  They do not agree that the Lake Block should be sold for a price as low as $412,500 (75% of $550,000, the value given by registered valuers).  The only mechanism the heads of agreement offers for sorting these matters out is the provision for further comprehensive documentation in paragraph 4. The reservation of leave in paragraph 5 is for implementation, not for the Family Court to fill in the gaps in the parties’ agreement. With her draft orders the plaintiff is asking the court to make the parties’ agreement for them in parts where they have not agreed. In Coal Cliff Collieries Pty Ltd v

Sijehama Pty Ltd, Kirby P said:15

Courts are not well equipped, drawing on their own experience, to fill out the detail of such contracts where the parties leave gaps in their own agreement. The fact that this may result in wasted time and money is a risk which parties to negotiation must always weigh up. Courts cannot enforce such agreements because they are incapable of judging where the negotiation on particular points would have taken the parties, acting bona fide but legitimately in their own interests.

[40]     The matters of security, default interest and terms of sale are not gaps that can be filled by implication.     The  parties intended that there should be provisions addressing these matters, but did not set them out in detail. The agreement is incomplete in these aspects.

[41]     The  trustees  of  both  trusts  had  to  agree.    They were  not  present  at  the settlement conference.   No agreement could take effect until they consented. Paragraph 3 addresses this by making the heads of agreement conditional on their

consent, but it reinforces the point that the agreement was not immediately binding.

15     Coal Cliff Colleries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 (NSWCA) at 20.

[42]     The effect of the absence of the certificates under s 21F(5) was that neither party had  the  assurance  from  the  other  party’s  lawyer  that  the  other  party had received independent advice as to the effect and implications of the relationship property aspects of the agreement. That was not to come until a comprehensive agreement under paragraph 4 had been drawn up and signed.  In deferring the time for certificates to be given under s 21F, the parties cannot be taken to have agreed to be immediately bound.

[43]     I conclude that the case comes within the third case in Masters v Cameron. It did not take immediate effect and was incomplete. The defendants have an arguable defence that the heads of agreement are not enforceable at common law.

S 21J of the Property (Relationship) Act

[44]     The first defendant says that he has a defence that the heads of agreement should be set aside under s 21J as giving effect to the agreement would cause serious injustice.  As I have held that he has an arguable defence that he is not bound by the agreement at common law, it is strictly not necessary for me to consider that defence. The first defendant’s complaint is that the agreement is unfair because of the difficulties in raising $1,000,000 from the sale of trust assets.   His complaint is directed at the settlement of the claims in respect of the family trusts under s 182 of the  Family  Proceedings Act.    His  argument  that  this  bears  on  the  relationship property components is thin. In the light of the current trend of decisions under s 21J

the test for serious injustice is significantly high.16   If there had been a valid section

21A agreement which had taken immediate effect and which broadly followed the terms of the heads of agreement, I am doubtful that I would have found that the first defendant had an arguable defence based on s 21J.

Variation of agreement

[45]     In her statement of claim the plaintiff accepted a reduction of $75,000 in the amount she was claiming on the basis of sharing part of the loss in the sale of the

16          Harrison v Harrison [2005] 2 NZLR 349, Wells v Wells [2006] NZFLR 870, and

Clark v Sims [2004] 2 NZLR 501.

Lake Block. That was withdrawn in the hearing and in the draft orders filed after the hearing.    The defendants want to hold her to the reduction.  That aspect does not require determination now in light of my decision that the heads of agreement are arguably not enforceable.

Disposition

[46]     This proceeding is an abuse of process for duplication of proceeding.   The defendants have not sought an order striking out the proceeding.  Nevertheless the plaintiff needs to elect whether she wishes to continue her claim in this court or the Family Court.  She cannot sue on the same matters in both courts.

[47]     The defendants have arguable defences that they are not bound by the heads of agreement because they are not binding at common law and also for non- compliance with s 21F(5) of the Property (Relationships) Act.

[48]     I make these orders:

(a)       I dismiss the application for summary judgment;

(b)I direct the Registrar to arrange a telephone conference for the week of 30 July 2012.  For that conference the plaintiff is to advise whether she will continue with her proceeding in this court or whether she will continue in the Family Court instead.  If the case is to continue in this court, directions will be given for a statement of defence to be filed and served, plus further case management directions;

(c)      I will hear any application for costs in the telephone conference.  Any party seeking costs should file and serve a memorandum setting out a calculation of the costs sought.

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

R M Bell

Associate Judge