F v D

[2013] NZHC 2132

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2013-419-001148

[2013] NZHC 2132

BETWEEN

F

Plaintiff

AND

D

Defendant

Hearing:

16 August 2013

Appearances:

G Wilkin for the Plaintiff

P F Gorringe for the Defendant

Judgment:

21 August 2013

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

21.08.13 at 4:30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

F v D [2013] NZHC 2132 [21 August 2013]

[1]      This judgment considers the plaintiff’s summary judgment application.

[2] The plaintiff and the defendant entered into a relationship property agreement dated 27 March 2012. Relationship property included Contract Civil (2009) Limited (CCL 2009).

[3] Earlier on 5 March 2012 the parties entered  into  an  agreement  for  the purchase of the business of CCL 2009. The parties agreed the agreement for sale and purchase of the business should be read and considered as if incorporated into the relationship property agreement.

[4]      The primary terms of the agreement were:

(a)Their liabilities were fixed as:

$
National Bank	367,000
Mortgage NBNZ	30,000
NBNZ o/d	10,000
Mortgage Arrears	20,000
Lodge real estate	10,000
BDO	10,000
Total	$447,000

(b)The assets were fixed as:

$
[  ],             Hamilton (Family Home)	510,000
Contract Civil (2009) Limited	100,000
Total	$610,000

(c)The net equity was $163,000, so half each was $81,500.

(d)The assets and liabilities would all become the responsibility and property of the defendant.

(e)The defendant was therefore obliged to pay the plaintiff $81,500.

[5]     The defendant has not paid the amount she agreed to, or indeed any amount at all.

[6] In this proceeding the plaintiff claims the sum of $81,500. As well he claims damages of $100,000 because of the failure of the defendant or her nominee to complete the purchase of the business. That additional claim for damages is no longer pursued. Therefore the case is about whether the defendant has an obligation to pay that sum which she agreed to pay.

[7]  In a notice of opposition filed on 12 September 2012 the defendant pleaded that she intended to file and serve an application to set the relationship property agreement aside. It is further pleaded that she is not liable under the agreement for sale and purchase by virtue of a deed of novation dated 27 March 2012.

[8] A hearing upon the summary judgment application has been adjourned on a number of occasions awaiting a hearing upon the defendant’s application before the Family Court to set aside the relationship property agreement.

[9] By memorandum dated 24 May 2013 Mr Gorringe advised that the defendant wished to file an amended notice of opposition in order to “properly set out a ground for opposing the claim for the full $81,500 and she wishes also to seek leave to file a further affidavit in respect of those grounds so that the Court is more fully and properly informed of the basis for the opposition”.

[10] Mr Wilkin for the plaintiff responded and advised that any application to amend the notice of opposition would be opposed.

[11] The Court then timetabled a hearing upon the application to file an amended notice of opposition.

[12]     By order dated 24 June 2013 the Court directed that the summary judgment claim and the application to amend should be heard together.

Draft amended notice of proceeding

[13]     The application to amend the notice of opposition identifies the defendant’s grounds of opposition as follows, inter alia:

(a)The agreement for sale and purchase of the business was part of the relationship property of the parties.

(b)That agreement was taken into account as part of the distribution and division of relationship property between the parties, which contributed  to  an  adjustment  sum  payable  by  the  defendant  of

$81,500.

(c)After taking possession of the business, the defendant discovered that the plaintiff did not intend that the defendant or her nominee become the owner of the Taupo branch of the business.

(d)The agreement for sale and purchase listed the plant and equipment which was to be delivered to the defendant on settlement but from which many items were missing from delivery.

(e)As a result, the value of the business acquired by the defendant was significantly diminished, which in turn would reduce the amount of the adjustment sum.

The relationship property business

[14]     The plaintiff and defendant were married in 1991.     They separated on 1 November 2010.

[15]     CCL (2009) was acquired on 25 March 2009.     The plaintiff became its director.  The defendant was never a shareholder or director.  CCL 2009 purchased a

business which hired/leased temporary traffic management equipment to other companies for use at temporary management sites around the greater Waikato region. The purchase price was $350,000.

[16] The business had operated out of Hamilton, Taupo and Waitoa.  The defendant said she had nothing to do with the business and had no access to any bank statements and computers of it. She said she was totally excluded from the business operations.

[17] The defendant says the business operated poorly and there were defaults in the loan payments to the National Bank from whom the funds were borrowed to buy the business.

[18] On 12 April 2012 the defendant says she was advised by Mr Chatwin the plaintiff’s lawyer that only the Hamilton assets of the business and not the Taupo assets were sold to her.

[19] Following that issues were raised in correspondence and  the  defendant claimed the plaintiff had destroyed the revenue of the business, was withholding plant and equipment, and had deleted customer databases, account histories and invoices.

[20] The defendant says that in hindsight she now understands why the agreement for the sale and purchase of the business only addressed the assets of the business and not “the entire business”. She said it does not refer to customer lists and other records, or with conduct pending settlement and the preservation of the value of the business until settlement; and does not provide for assets located in Taupo or Waitoa which she had subsequently become aware of.

[21] The defendant incorporated Contract Civil (2012) Limited (CCL (2012)) for the purchase of buying the business of CCL (2009).

[22] After the business assets were agreed to be acquired the defendant engaged the services of another to undertake a stock take and assessment of the condition of the assets.

[23] Settlement of that purchase has not been effected, the defendant says because, inter alia:

(a)The plaintiff claims that CCL (2009) owned the Taupo portion of the business together with the assets located in Taupo.

(b)There are over 550 items of assets missing from the asset list provided by the plaintiff.

(c)Through CCL (2009) the plaintiff has retained the business income driven from the assets located at Taupo.

(d)The plaintiff has alienated the customer base of CCL (2009) such that they will not deal with the business anymore.

[24] In her affidavit in support of her application to amend her notice  of opposition the defendant deposes that she had applied to the Family Court to set aside the relationship property agreement because the plaintiff had by his summary judgment application sought not only $81,500 being the figure she had been required to pay, but also sought $100,000 which was the price to have been paid to acquire the business.

[25] The day before the matter was to be heard in the Family Court the plaintiff through his solicitor accepted that the correct figure for which payment was claimed did not include an additional $100,000 in relation to the sale and purchase of the business. In the circumstances the defendant withdrew her application to the Family Court to set aside the relationship property agreement.

[26] The defendant’s position is that due to positions and actions taken by the plaintiff in relation to the business, he diminished its value and thus the proper amount of the adjustment sum should be amended.   By causing the value of the

business to drop, the plaintiff also reduced the amount of the adjustment sum from

$81,500. The defendant concedes there is an amount that she will need to pay the plaintiff but not the full figure of $81,500.

[27] In his affidavit in opposition to the filing of an amended notice of opposition the plaintiff did not address the defendant’s claims that she received much less of the business than she bargained for.

[28]   The plaintiff in his affidavit supporting his opposition to the amended notice of opposition claims the matter concerns a dispute between CCL (2009) and CCL (2012). He asserts CCL (2012) took possession of the business on 1 April 2012 and that the agreement for sale and purchase was finally settled when monies were paid to the bank in January 2013.

[29] The plaintiff’s position supported by Mr Wilkins’ submissions is that any issue between the vendor and the purchaser of the business is not currently before the Court because the plaintiff’s claim is only for the balance due under the relationship property agreement.

Considerations

[30]   I advised counsel at the beginning of the hearing that leave would be granted to file the amended notice of opposition and the affidavit provided in support of that.

[31] The Court rules there is no prejudice to the plaintiff in allowing those documents to be filed. Further, they more accurately portrayed matters in dispute upon the plaintiff’s summary judgment claim. Also, the original claim included a claim for damages which it should not have. Issues between the parties focus on the nature of the bargain agreed for which the defendant assumed responsibility for payment of the adjustment sum of $81,500.

[32] The plaintiff provides no response at all to those claims the defendant says support her. She did not know about the Taupo business assets being retained by the plaintiff until after the deal was struck.  Enquiries revealed that what was able to be

provided by way of a business asset was arguably significantly less than what the plaintiff represented to provide.

[33] The defendant was to acquire, she says she believed, the whole business inclusive of a central base in Hamilton, and outreaches elsewhere including Taupo.

[34] It seems that whilst a price for the business of $100,000 was struck on the basis of business records which included reference to income received from the Taupo branch, only the Hamilton assets were, the plaintiff says, to be sold.

[35] These matters are not for consideration at this time because of the Court’s clear view that the plaintiff is not entitled to summary judgment. Significant facts for further consideration include:

(a)Neither the relationship property agreement nor the agreement for sale and purchase referred to the business being transferred except in relation to the Taupo enterprise.

(b)The word Taupo does not appear in the sale and purchase agreement and the Taupo enterprise was part of the business of CCL (2009).

(c)The relationship property agreement made no provision to exclude the Taupo agency but there is a provision in that document recording that the plaintiff was to retain all the remaining assets and liabilities of CCL (2009). Those assets were particularised as including a debt owed to the plaintiff by the company and payment to him of accounts receivable to the date of transfer. There is no reference to  him retaining the Taupo enterprise.

(d)The agreement for sale and purchase incorporated a comprehensive list of equipment. Subsequently enquiries reveal a substantial shortage of equipment transferred.

[36] The Court does not agree with the plaintiff’s claims that issues relating to the value of the business assets are a matter between the vendor and the purchaser of those namely CCL (2009) and CCL (2012).

[37] Obviously it suited the plaintiff for the business assets to be transferred to a company set up by the defendant. In fact the establishment by the defendant of a new company was simply part of the process of transferring to her matrimonial property at an agreed value. Because arguably property to that value was not transferred, then there is a question about the defendant’s responsibility for payment of the adjustment sum of $81,500.

Judgment

[38]     The plaintiff’s application for summary judgment is dismissed. [39]   As counsel agree costs are to be reserved.

Other matters

[40]    It seems appropriate to send the matter back to the District Court.

[41] I offered the parties recourse to a judicial settlement conference and for that purpose adjourned the matter for call in the chambers list on 16 September 2013 at 3:45pm.

[42] The matter will only proceed to a judicial settlement conference if both parties agree.

Associate Judge Christiansen