Farrand v Farrand
[2024] NZHC 1405
•31 May 2024
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV-2023-488-000074
[2024] NZHC 1405
BETWEEN KERRY ALFRED FARRAND and THU ANH NGO
Plaintiffs
AND
NICKOLAS GLENN FARRAND and
TRUSTEE SERVICES (2020) LIMITED as
trustees of the Nick Farrand Trust Defendants
Hearing: 27 May 2024 Appearances:
N Nicholls for the Plaintiffs R C Mark for the Defendants
Judgment:
31 May 2024
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 31 May 2024 at 11.00 a.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Fortune Manning, Auckland Martin Nicholls Ltd, Kerikeri
R Mark, Kerikeri
FARRAND v FARRAND LTD [2024] NZHC 1405 [31 May 2024]
Introduction
[1] The plaintiffs apply for summary judgment of their claim for orders that the defendants specifically perform a Boundary Adjustment Agreement between them, including by allowing the plaintiffs’ surveyors access to their land.
[2] The defendants oppose summary judgment because there are significant factual disputes about whether they entered into the Boundary Adjustment Agreement under the undue influence and/or duress of the first-named plaintiff, Kerry Farrand.
[3] The issue to be decided is whether the defendants have a reasonably arguable defence to the plaintiffs’ claim.
Background
[4]The plaintiffs, Kerry Farrand and Thu Thi, are husband and wife.
[5] The first-named defendant, Nickolas Farrand, is Kerry’s son from his first marriage to Kristen Farrand. Kerry and Kristen separated in 2008 and divorced in 2013.
[6] Kerry settled the KA & KJ Farrand Family Trust (FFT) in 1996. Kerry and Kristen are co-trustees and primary beneficiaries. Their four children and Kerry’s son with Thu are secondary beneficiaries. Kerry and Kristen have been attempting to agree how to wind up the trust and distribute the assets based on an equal share for many years. In October 2023, Kerry applied to this Court for orders under s 133 of the Trusts Act 2019 to wind up the FFT. The statement of claim records that the net asset value of the FFT is estimated at about $20 million. The application has not been determined yet.
[7] At some point in 20201 Kerry and Thu entered into written agreements to purchase two adjoining sections in a new subdivision in Kerikeri – 16 and 18 Fernbird
1 The agreements for sale and purchase are undated apart from the year 2020.
Grove (16 Fernbird and 18 Fernbird respectively).2 Kerry also entered into a written agreement for the FFT to purchase 17 Fernbird Grove3 for his daughter, Hayley.
[8] Kerry and Thu personally paid the $40,000 deposit for 16 Fernbird. Kerry arranged for the $75,000 deposits for 17 and 18 Fernbird to be paid by Farrand Orchards Limited. Farrand Orchards Ltd is owned by the FFT.
[9]On 27 January 2021, Kerry and Thu completed the purchase of 16 Fernbird.
[10] On 29 April 2021, the trustees of the FFT completed the purchases of 17 and 18 Fernbird.
[11] There is a factual dispute between Kerry and Nickolas about the circumstances leading to the purchase of 18 Fernbird. Kerry’s evidence is that he and Thu decided to purchase both 16 and 18 Fernbird to be their retirement home. He deposes that he intended to build a house over the front of the two sections and that the rest of the land was to be used for a home orchard.
[12] Kerry’s evidence is that he and Thu were unable to complete the purchase of 18 Fernbird because the FFT was not wound up by the settlement date as he had anticipated, and he did not have the money. He says that he arranged for the FFT to pay the balance of the purchase price and take title to 18 Fernbird, expecting that when the FFT was eventually wound up, the property would be transferred to him.
[13] Kerry’s evidence is that Nickolas began “hounding” him to sell one of 16 or 18 Fernbird to him. He says that he initially resisted, but eventually agreed to allow Nickolas to have 18 Fernbird on the condition that there would be a boundary adjustment to give 16 Fernbird the flat land by the river for Kerry’s intended orchard.
[14] Nickolas gives an entirely different account. He says that when he returned from Australia in October 2015, he developed a section at 6 Stoneybrook Lane, Kerikeri, by building a house on it. He says the property was owned by the FFT, but
2 Lots 43 and 44 respectively.
3 Lot 49.
since he built the house, the arrangement was that he would receive the profit from the development. Instead, the FFT kept the profit of $320,000.
[15] Nickolas also says that an investment property he identified at 25 Boswell Street, Kawakawa (25 Boswell), was purchased by the FFT for him because his profit from the Stoneybrook Lane development was held by the FFT.
[16] Nickolas says that 18 Fernbird was never part of Kerry’s retirement plan. He says that it was always intended that 18 Fernbird would be his to build a home on. He says that it was meant to be purchased in his name, but he was unable to settle the purchase because his money was held by the FFT. He says that he arranged with Kerry for the FFT to purchase 18 Fernbird for him. He says that Kerry was already talking to the real estate agent selling the sections so he handled the negotiations.
[17] Around six months after 18 Fernbird settled, on 17 November 2021, Kerry and Thu and the trustees of the Nickolas Farrand Trust (NFT) entered into a Boundary Adjustment Agreement. The NFT trustees agreed to the boundary between 16 and 18 Fernbird being adjusted according to a plan attached to the Agreement. The adjustment would mean that the back portion of 18 Fernbird by the river would be sold to Kerry and Thu to be joined with 16 Fernbird. The adjustment would leave a narrow strip of land that would give 18 Fernbird access to the river. The Agreement provided that the NFT trustees would sign all necessary consents and documents for the transfer of the land. Consideration for the land was to be determined by a valuation at the time of transfer.
[18] On 19 November 2021, the FFT as vendor and the NFT as purchaser entered into a Deed of Sale and Purchase and Acknowledgement of Debt. Under this deed the FFT agreed to sell 18 Fernbird to the NFT at a price of $330,000 including GST, and 25 Boswell at a price of $400,000. The Deed provided that the purchase price would remain outstanding as a debt payable by the NFT on demand.
[19] Title to 18 Fernbird was transferred to the trustees of NFT that day. The title to 17 Fernbird was also transferred to Hayley that day.
[20] Nickolas claims that he entered into the Boundary Adjustment Agreement under duress, and that it is unfair. He says that he had no alternative but to agree to the Boundary Adjustment Agreement to get the FFT to transfer title to 18 Fernbird and 25 Boswell to him. He says that he could not raise the finance to build himself a home on 18 Fernbird as planned unless the property was in his name. He says that Kerry had him “over a barrel” and he had no choice but to agree to the boundary adjustment despite it leaving 18 Fernbird with no access to the river. He says that the strip left after the proposed adjustment is a swamp and is impassable.
Legal principles
[21]Rule 12.2(1) of the High Court Rules 2016 provides:
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.
[22] The relevant principles governing a summary judgment application are well-established:4
(a)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. The Court must be left without any real doubt or uncertainty.
(b)The onus is on the plaintiff, but where the evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.
(c)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, for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable. In the end, the Court’s assessment of the evidence is a matter of judgment.
4 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].
The Court may take a robust and realistic approach where the facts warrant it.
[23] A defendant is under an obligation to lay a proper foundation for their defence in the affidavits filed in support of the notice of opposition.5
Discussion
[24] Mr Nicholls for the plaintiffs makes two main submissions in support of the application for summary judgment. First, that the defendants are estopped from contending that the Boundary Adjustment Agreement is voidable for duress and/or undue influence because they affirmed the agreement. Mr Nicholls submits that the defendants affirmed the Boundary Adjustment Agreement by entering into the Deed for Sale and Purchase and Acknowledgement of Debt, proceeding to build a house on 18 Fernbird, and not taking steps to have the Agreement set aside.
[25] Second, Mr Nicholls says that the defendants have failed to provide an evidential foundation for their arguable defence, despite Nickolas filing two affidavits in opposition to the application.
[26] I am not persuaded that the defendants do not have a reasonably arguable defence, for the following reasons.
[27] First, there is a substantial factual dispute between Kerry and Nickolas that goes to the heart of the plaintiffs’ claim. They seek orders for specific performance of the Boundary Adjustment Agreement. If that agreement was obtained by duress or undue influence, it is voidable. Resolution of the factual dispute requires findings to be made regarding Kerry’s and Nickolas’s credibility, which is not possible in this summary jurisdiction.
[28] Second, I do not accept that there is no evidential foundation for the defendants’ defence. A letter from solicitors acting on the purchase of 18 Fernbird from the developer dated 22 April 2021 has the subject heading “Neil Construction
5 Middleditch v NZ Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.
Limited, sale Lot 44, Fernbird Grove, Kerikeri (Stage 2) to N G Farrand”. The logical inference is that by this date Nickolas had been nominated by the plaintiffs to purchase the property. That is consistent with Nickolas’s evidence that the arrangement was that he would take title to 18 Fernbird, although it leaves unexplained why the plaintiffs were the original purchasers on the agreement for sale and purchase.
[29] Mr Nicholls submits that the reference to Nickolas in this letter is explained by the fact that by this date Kerry and Nickolas had verbally agreed that Nickolas would take ownership of 18 Fernbird subject to the boundary adjustment between 16 and 18 Fernbird (later recorded in the Boundary Adjustment Agreement and the Deed of Sale and Purchase and Acknowledgement of Debt).
[30] However, that explanation does not reconcile with Kerry’s evidence.6 He deposes that it was after the purchase of 16 and 18 Fernbird settled that he told his children that he and Thu had purchased the sections, and that they intended to join the sections and build a house across them. Kerry’s evidence is that it was from that date that Nickolas began asking Kerry to sell one of the sections to him.
[31] I consider the April 2021 letter to provide evidential support for Nickolas’s case that there was an expectation, after the plaintiffs entered into the agreement for sale and purchase for 18 Fernbird, that Nickolas would take title to the property. He appears to have been the nominated purchaser, though later replaced by the FFT. Kerry and Nickolas need to be examined on this issue. Discovery of the conveyancing files can be expected to provide answers.
[32] Third, there are other aspects to the plaintiffs’ case that call for further inquiry. For one, if Kerry and Thu intended to purchase 18 Fernbird for themselves, why did they not pay the deposit for 18 Fernbird? Kerry deposes that when he used monies from Farrand Orchards Limited for personal purchases, the amount is recorded either as a loan or as drawings. That does not explain, however, why he chose to pay the deposit for 16 Fernbird himself and chose to pay the deposit for 18 Fernbird with funds from Farrand Orchards.
6 22 January 2024 affidavit.
[33] Another curiosity is why Kerry and Thu allowed what they say was an important piece of land they wanted for their retirement to be bought by the FFT. As noted earlier, Kerry is involved in a long running dispute with his ex-wife and co-trustee about how to wind up the FFT. It seems unlikely that he would bring land that formed part of his retirement plan under the ownership and control of this contested trust. Kerry needs to explain.
[34] Fifth, it is notable that the Boundary Adjustment Agreement was signed on 17 November 2021, and the Deed by which the FFT agreed to sell 18 Fernbird to the NFT was entered into two days later. It could be inferred that it was a condition of the FFT transferring 18 Fernbird to the NFT that the NFT trustees first agree to the boundary adjustment. Indeed, in submissions Mr Nicholls accepted that the sale by the FFT to the NFT was conditional on the NFT trustees signing the Boundary Adjustment Agreement. However, he submits that this condition did not constitute duress or undue influence. In my view that depends in part on factual findings as to what the prior agreement between Kerry and Nickolas concerning 18 Fernbird was.
[35] Sixth, I find it difficult to follow how Nickolas can be said to have affirmed the Boundary Adjustment Agreement by signing the Deed of Sale and Acknowledgement of Debt two days later. Nickolas’s defence is that he had no alternative to signing the Boundary Adjustment Agreement because otherwise the FFT would not transfer title to the property to him. That is, he was forced to sign the first agreement in order to bring about the second agreement. If his account is true, had he refused to sign the Deed of Sale he would have been back to where he started and been deprived of the very thing he wanted – title to 18 Fernbird.
[36] What would constitute affirmation of the Boundary Adjustment Agreement is the NFT trustees taking some action indicating an intention to move the boundary and transfer the back portion of 18 Fernbird to Kerry and Thu. The plaintiffs have not pointed to any conduct of that kind. As far as the Court is aware, the first step taken by either party to implement the Boundary Adjustment Agreement was Kerry’s request to have surveyors access 18 Fernbird to survey the new boundary. Nickolas has refused that access.
[37] Overall, I am clear that this claim is not suitable for summary judgment. There are disputed issues of fact that go to the core of Kerry and Thu’s claim. These disputes cannot be resolved on the affidavit evidence. There is some support for Nickolas’s defence in the documents, and too many unexplained issues. Discovery is required, as is a hearing at which the credibility of Kerry and Nickolas can be evaluated.
Result
[38]The application for summary judgment is dismissed.
[39]In accordance with the principle in NZI Bank v Philpott, costs are reserved.7
Associate Judge Gardiner
7 NZI Bank v Philpott [1990] 2 NZLR 403, (1990) 3 PRNZ 695 (CA).
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