Ferreira v Stockinger

[2015] NZHC 2916

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-7528 [2015] NZHC 2916

BETWEEN

PETER FERREIRA

Plaintiff

AND

DANIELA STOCKINGER First Defendant

AND

AGAPE-HIGH HOLISTIC HORSEMANSHIP LIMITED Second Defendant

Hearing:	25 June 2015
Appearances:	M Matthew for Plaintiff No appearance for Defendants
Judgment:	20 November 2015

JUDGMENT OF DUFFY J

This judgment was delivered by me on 20 November 2015 at 4.00 pm pursuant to

Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Solicitors:

Rennie Cox, Auckland

FERREIRA v STOCKINGER [2015] NZHC 2916 [20 November 2015]

[1]      The plaintiff brings claims against the first and second defendants in this Court’s civil jurisdiction based on equitable estoppel, unconscionable conduct and conversion.  The plaintiff also brings a claim under the Property (Relationships) Act

1976. The defendants have not filed statements of defence, nor have they taken steps to oppose the claims made against them. Accordingly, the claims have proceeded by way of formal proof.

[2]      This dispute arises following the end of a de facto relationship between the plaintiff, Peter Ferreira, and the first defendant, Daniela Stockinger (now Mrs Galy).1

They are German nationals who were independently wealthy at the material times.2

During their relationship Mr Ferreira and Ms Stockinger spent substantial sums of money  acquiring  real  and  personal  assets  in  foreign  jurisdictions  and  in  New Zealand.  Some of those assets were acquired in the name of corporate entities.  The parties  spent  substantial  sums  of  money  acquiring  assets  and  financing  an extravagant lifestyle, which included numerous overseas trips.

[3]      The parties’ de facto relationship commenced in January 2004 and ended in May 2005.  It then re-commenced in June 2005 and ran until November 2006.  For some  of  the  time  during  the  course  of  their  relationship  Mr  Ferreira  and Ms Stockinger were present in New Zealand.

[4]      A de facto relationship that is otherwise subject to New Zealand law and which lasts for less than three years is categorised as a relationship of short duration under the Property (Relationships) Act 1976.3    There is no impediment in such cases to the parties bringing claims in the civil jurisdiction of the New Zealand legal

system.

1      Ms Stockinger has since married and is now known as Mrs Galy, however I shall refer to her throughout this judgment as Ms Stockinger as that is the name by which she was known at the material times.

2      Each now seems to be in financially strained circumstances.

3      Property (Relationships) Act 1976, s 2E. Pursuant to s 14A of the Act, an order for the division of relationship property of a de facto relationship of short duration cannot be made under the Act

unless either there is a child of the relationship or the applicant has made a substantial contribution to the relationship, and the court is satisfied that failure to make an application would result in serious injustice. If these requirements are met then the share of each partner in the relationship property is to be determined in accordance with the contribution of each partner to the de facto relationship.

[5]      Mr Ferreira now claims that in terms of funds that he advanced either directly or indirectly to Ms Stockinger or to an entity associated with her he did so in reliance on representations she made that she would repay those sums some time in the future.  Further that Ms Stockinger has failed to honour those representations.  This has led him to make claims under the New Zealand law of equitable estoppel and/or “unconscionable conduct” and to seek an award of “equitable damages” in the total sum of $2,449,006.07 plus interest under s 87 of the Judicature Act 1908.

[6]      Mr Ferreira  also  makes  a claim  under  New  Zealand law for the  tort  of conversion in relation to Ms Stockinger’s actions in allegedly seizing his personal property.  Here he seeks damages in the total sum of $324,819.03.

[7]      Mr Ferreira seeks a declaration that $63,400 he transferred to BDO Spicer as

a “stakeholder” is his property, thus enabling that sum of money to be paid to him.

[8]      In addition to the claim currently before the Court, Mr Ferreira has previously commenced litigation against the first defendant in the Family Court and, through a company, sought summary judgment against the second defendant.   In the present proceeding Mr Ferreira seeks “equitable damages in respect of the legal expenses that he incurred” in those proceedings. The amount claimed is $200,000. He also seeks solicitor-client costs in respect of the current claim.

[9]      Finally, Mr Ferreira seeks orders under the Property (Relationships) Act 1976 declaring that he and Ms Stockinger were in a de facto relationship of short duration within the meaning of s 14A of the Property (Relationships) Act; and an order granting him leave under s 14A to bring a proceeding under that Act.

Jurisdiction

[10]     At present neither Mr Ferreira nor Ms Stockinger reside in New Zealand.  He resides in Switzerland and she resides in Austria.  The second defendant is a New Zealand registered limited liability company (hereafter referred to as AHQ).

[11]     Mr Ferreira made no submissions as to the parties’ domicile.   As German

nationals the couple’s original domicile would have been Germany.   To acquire a

domicile  in  New  Zealand  they  needed  to  meet  the  requirements  of  s  9  of  the

Domicile Act 1976.4

[12]     Mr Ferreira’s affidavit evidence reveals that he has never held the right to reside permanently in New Zealand, and while he was in the country he could remain here for no more than three months continuously.   His application for residency in  New  Zealand  was  declined  on  25  June  2007.    In  his  affidavit  he describes himself as living in exile in Switzerland.  This is because he cannot reside indefinitely in New Zealand and he cannot return to his home country because he is the subject of a tax investigation there.  Accordingly, I have difficulty seeing how he could be said to have acquired a New Zealand domicile in terms of the requirements

of s 9 of the Domicile Act 1976.5

[13]     In an affidavit dated 5 April 2013 Ms Stockinger says that she resides in Austria and has done so since December 2010.6   She says nothing about whether she may have acquired a New Zealand domicile.  However, the circumstances suggest to me that since moving to Austria it is unlikely that she has a New Zealand domicile.

[14]     The parties’ domicile can affect the extent to which Mr Ferreira is able to

litigate a dispute in this country under its laws.

[15]     Initially Mr Ferreira filed proceedings in the Family Court in November

2009.7    By then he was residing outside New Zealand.  It seems from the evidence that I have seen that Ms Stockinger was then still residing in New Zealand.  If at that time Ms Stockinger was domiciled in New Zealand, s 7 of the Property (Relationships) Act would have applied the provisions of that Act to immoveable property  situated  within  New  Zealand  and  moveable  property  situated  in  New

Zealand or elsewhere.  But by the time Mr Ferreira filed proceedings in this Court he

4      To acquire a new domicile in New Zealand at a particular time a person must be in New Zealand and intend to live here indefinitely.

5      Mr Ferreira commenced the present proceedings in 2012 which is approximately five years after he learned that he could not reside permanently in New Zealand.

6      Ms Stockinger took no part in defending this proceeding.  However, Mr Ferreira relied upon the

evidence  that  was  filed  in  the  Family  Court  proceeding,  which  includes  the  evidence  of Ms Stockinger.   On occasion he referred to her affidavit evidence as a source for the factual statements he made in his chronology of events.  I consider therefore that in order to understand fully what occurred Ms Stockinger’s evidence in the Family Court is available to me.

7 These proceedings are discussed in more detail below at [101].

and Ms Stockinger were both resident overseas.   This country’s immigration laws meant he could not live here indefinitely, and Ms Stockinger’s change of residence to Austria suggests to me that she was no longer intending to live in New Zealand indefinitely.

[16]     Whilst her correct address in Austria is pleaded in the initial statement of

claim, and the current pleading, the front sheet gives Ms Stockinger’s address as 98

Orere Point Road RD 5 Clevedon, Auckland which is in conflict with the address given in the body of both pleadings.  On 19 December 2012 Associate Judge Bell directed on the court file that as Ms Stockinger resided outside the jurisdiction leave to  serve  outside  the  jurisdiction  was  required.    Had  such  leave  been  sought Mr Ferreira would have been obliged to address questions of domicile, jurisdiction, conflict of law, and forum conveniens in relation to the claims that arise from events outside New Zealand.   However, no such leave was sought.   Consequently those questions were not addressed.

[17]     On  19  February  2013  Ms  Stockinger  and AHQ  filed  an  application  for security for costs supported by an affidavit and a memorandum. They sought to have the time for filing a statement of defence deferred until the security for costs application was determined.8   Mr Ferreira then took steps to have the Family Court proceedings moved to this Court.  On 25 March 2013 Associate Judge Christiansen issued a minute in which he referred to the parties’ joint memorandum which advised

that the parties were involved in proceedings in the Family Court; that Mr Ferreira intended to bring an application for those proceedings to be removed to the High Court; and that Ms Stockinger would be opposing the application for removal.  The minute noted that the parties requested the present proceeding be stayed and that Ms Stockinger  and  AHQ  not  be  required  to  file  a  statement  of  defence,  nor Mr Ferreira to file a response to their application for security for costs.  The court file shows that the present proceeding was called in this Court a number of times, but it could not be dealt with due to the parties waiting for a decision from the Family

Court on the transfer of the Family Court proceedings to this Court.  On 28 March

8      It is arguable as to whether by filing this application Ms Stockinger has taken a step in the proceeding which amounts to her submitting to the court’s jurisdiction.   Mr Ferreira never addressed this issue.

2014 Associate Judge Christiansen issued a minute recording that no hearing date in the Family Court had yet been scheduled.  The parties had requested that any further call of the present proceeding be deferred until September 2014, which Associate Judge Christiansen directed.   Then on 14 May 2014 Associate Judge Christiansen issued a minute recording the defendants’ lawyers had filed an application to withdraw as solicitors on the record.   Such leave was granted on 21 May 2014. From then on neither Ms Stockinger nor AHQ took any steps in this proceeding.

[18]     In principle, any claims that Mr Ferreira might make in respect of acts or omissions  done  within  New  Zealand  would  not  require  leave  to  serve  the proceedings on Ms Stockinger overseas.9    However, any claims made in respect of acts or omissions done outside of New Zealand are likely to fall outside the scope of r 6.27, and so leave to serve overseas would then be required.10

[19]     With the present proceeding, the allegations on which the first and second causes of action rest are a mishmash of actions, omissions and events that occurred both inside and outside New Zealand.   The Court of Appeal has made it plain in Wing Hung Printing v Saito Offshore that where there are multiple causes of action there should be separate consideration of whether each cause of action falls within

one or more of the paragraphs of r 6.27.11   Where, as is the case here, the allegations

in one cause of action are a mishmash that partly fall within and partly fall without any one of the paragraphs of r 6.27 the result may be that leave is required for the entirety of that cause of action.12   In my view it is for Mr Ferreira to make out a case for this Court assuming jurisdiction in relation to all aspects of his causes of action. He has not done so.

[20]     The problems presented by the form of this proceeding were recognised by

Associate Judge Bell. However, as noted his order of 19 December 2012 directing

9      High Court Rules, r 6.27(2).

10     Rule 6.28.

11     Wing Hung Printing Co Ltd v Saito Offshore [2010] NZCA 502, [2011] 1 NZLR 754 at [69]–

[72].

12     The  equitable  estoppel  cause  of  action  pleads  numerous  allegations  of  advances  and representations as to payment, some of which occurred in New Zealand and others outside of New Zealand.

that there be compliance with the rules for service out of the jurisdiction appears to have been ignored.

[21]     The  failure  to  comply  with Associate  Judge  Bell’s  direction  means  that Ms Stockinger’s right to protest jurisdiction has been prejudiced by Mr Ferreira’s failure to bring the proceeding in the appropriate form.   The notice of proceeding dated 14 December 2012 does not comply with r 6.31 and form G6.  This prescribed form of notice to a defendant served abroad is required to contain notification of the right to enter an appearance and object to the jurisdiction of the Court.

[22]     At  the  formal  proof  hearing  the  submissions  for  Mr  Ferreira  simply proceeded as if New Zealand law applied to all aspects of the proceeding, and there was no impediment to Ms Stockinger being sued as a defendant in New Zealand. Nowhere did the submissions address the topic of conflict of laws, and whether a New Zealand court can have regard to how promises to repay advances of funds might be enforced if made in other jurisdictions.

[23]     There is a general principle that it is undesirable to subject a foreigner to this Court’s jurisdiction, especially where the claim has little contact with New Zealand, or the claim is dubious.13    Insofar as Mr Ferreira makes a claim in conversion for tortious acts done within New Zealand this court has jurisdiction to deal with such matters.14   It is less clear to me whether there is jurisdiction to deal with claims based on equitable estoppel or unconscionable conduct in the present circumstances, as those causes of action are not listed in r 6.27, and Mr Ferreira has not pointed to any other aspect of r 6.27 that might permit this court to deal with those causes of action. Nor was any argument advanced that r 6.29 might permit this court to deal with them.15

[24]     Furthermore there is an additional procedural problem that Mr Ferreira has failed to address.  Rule 15.11 provides that where a document has been served on a

party outside New Zealand under r 6.27 and that party has not appeared, judgment

13     Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460, [1986] All ER 843 (HL).

14     See r 6.27(2)(a) of the High Court Rules.

15     Rule 6.29 allows a Court when service has been effected outside New Zealand without leave and the defendant disputes jurisdiction to assume jurisdiction.

by default against that party must not be sealed without leave of the Court.  Before granting leave the Court must be satisfied that the party applying for leave was entitled to effect service outside New Zealand under r 6.27, and there is no reason to believe  that  service  was  effected  contrary  to  the  law  of  the  country  concerned relating to service of documents in domestic proceedings in that country and that service was effected in sufficient time to give the party an opportunity to appear.  In the present case Mr Ferreira has not addressed the criteria in r 15.11(2).  Thus any judgment by default he obtained may not be able to be sealed, which in turn means that any judgment that is delivered may be futile.

[25]     On the other hand there are aspects of the causes of action that strike me as causing them to fail on the merits.  For this reason I propose to deal with them now as  I see little point in delaying the disposition of this proceeding by providing Mr Ferreira with  an opportunity to make submissions on questions of domicile, jurisdiction, conflict of laws and forum conveniens when the causes of action that he relies upon lack merit.

Approach to entry of judgment by default

[26]     The present proceedings against Ms Stockinger and AHQ were commenced in 2012.  These were stayed for some time.  An order was then obtained removing the Family Court proceedings to the High Court and consolidating both sets of proceedings.

[27]     An amended statement of claim was filed on 11 March 2015.  The defendants never filed a defence.  Accordingly, the case falls to be determined by way of formal proof under r 15.9.

[28]     Mr Ferreira has provided a huge volume of affidavits and exhibits in support of his claims.  The majority of the evidence that he relies on is provided as exhibits to an affidavit sworn in 2009 which runs for 12 volumes and which was filed in the Family Court in support of his claim under the Property (Relationships) Act.   He only filed two affidavits in this Court in support of his claim.  One affidavit provides updating information from his solicitor which sets out the sale price of the property at Orere Point; the other provides information relevant to costs.

[29]     There is something of a disconnect between the evidence that Mr Ferreira filed  in  the  Family  Court  and  the  claims  in  equitable  estoppel/unconscionable conduct and conversion that he makes in this court.   The evidence he filed in the Family Court has been directed towards proving the extent of the contributions that he made in order to establish a de facto relationship that qualified under s 14A of the Property (Relationships) Act.   His claims in equitable estoppel/unconscionable conduct are based upon alleged representations that Ms Stockinger made to him.  To pursue   those   claims   he   would   need,   therefore,   to   prove   when   each   such representation was made and whether he subsequently relied upon each of them to

his detriment.16    His evidence lacks the specificity to achieve this outcome.  Much

has had to be gleaned from exhibits and inferred from circumstances described in the affidavits.

[30]     However, Mr Ferreira faces more difficult problems with the formal proof of his claims, as some of those claims entail the court piercing the corporate veil, and also ignoring the legal frame work that was adopted at the relevant time money was spent and liabilities assumed by Mr Ferreira.   Yet he has provided no reasoned argument for why the Court should depart from the established principles as to the separate identities of companies and their shareholders.   The fact the parties may have failed to recognise how the law views registered companies is no reason for the Court to depart from well settled law.

[31]     In short, the claims are not well presented.   In addition, much of the first amended statement of claim pleads evidence to prove elements of the causes of actions that he brings rather than just those elements.   The result is a confused mishmash of allegations.

[32]    The approach taken by Mr Ferreira may be explained by his counsel’s submission on the approach that this court should take when hearing a formal proof. She submitted that as Ms Stockinger has not filed a statement of defence it was not

necessary for Mr Ferreira to establish that the legal tests required to prove his claims

16     As  will  be  seen  later  there  are  New  Zealand  registered  companies  involved;  many  of Mr Ferreira’s claims involve the Court paying no regard to the separate legal personality of those companies.

had been met, and that it was only necessary to prove quantum.  This is wrong.  It reflects how the law regarding formal proof once was.17

[33]     Now r 15.9 of the High Court Rules applies to a formal proof hearing when no statement of defence has been filed and the plaintiff seeks judgment by default for other than a liquidated demand, which is the case here.   This rule provides a mandatory procedure:  “it does not involve the immediate entry of judgment by default”.18

[34]     Under r 15.9(4) a plaintiff must establish to a Judge’s satisfaction each cause of action relied on and, if damages are sought, provide sufficient information to enable the Judge to calculate and fix the damages.  The affidavit evidence required by r 15.9(4) should not include evidence that the Court could not receive if objection

was raised by the defendant.19

[35]     When it comes to the extent to which the plaintiff’s evidence is required to satisfy a Judge under r 15.5(4) the presence of r 15.5(5) gives some indication of what may be required.   Rule 15.5(5) permits a Judge to direct a deponent of an affidavit to attend the Court to give additional evidence.   The fact the rules make provision for a Judge hearing a formal proof to hear from witnesses whose evidence has obviously not been challenged by an opposing party suggests to me that the level at which a Judge is required to satisfy herself regarding the plaintiff’s evidence is much the same as it would be if the proceeding had gone to trial.  This view of r 15.9 is consistent with the observation of Kós J in Neumayer that the r 15.9 procedure

may not provide any advantage over allowing matters to run to trial.20   The view that

I take of r 15.9 is also consistent with the very helpful discussion of the earlier version of r 15.9 in Chen v Zhong, where Wylie J makes it clear that in a claim for

unliquidated damages where no statement of defence has been filed, it does not

17     See Dibble Bros Ltd v Tamanui [1971] NZLR 1144 (SC).

18     Neumayer v Kapiti Coast District Council [2013] NZHC 1106 at [8].

19     Stephens v Cribb (1991) 4 PRNZ 337 (CA) at 344 which deals with the former rule but which is applicable by analogy to r 15.9(4).

20     Neumayer v Kapiti Coast District Council, above n 18, at [8].

necessarily follow that allegations of fact made in the statement of claim are deemed to be admitted.21

[36]     On the other hand in a formal proof hearing, the plaintiff is only required to prove a cause of action so far as the burden of proof lies on the plaintiff.   The plaintiff is not required to engage with any matters of affirmative defences, set-off or counter-claim.22

Background facts relevant to equitable estoppel and unconscionable conduct claims

[37]     This account is taken from Mr Ferreira’s affidavits and from other affidavits that he referred to either in his submissions, or the chronology of events that he relied upon.

[38]     In 2004, Mr Ferreira and Ms Stockinger decided that they wished to purchase land in New Zealand and to move to this country.  In late October they visited New Zealand and looked at a property at Orere Point.

[39]     They were advised by their then lawyers in New Zealand, Hesketh Henry, to form two companies to represent each of their interests in New Zealand. Correspondence from Hesketh Henry to a German lawyer Dr Caroline Picot reveals that they were advised that to obtain approval from the Overseas Investment Commission (OIC) the two blocks of land they were interested in purchasing would need to be acquired separately as any joint acquisition would make it more difficult to obtain OIC approval.  I also gained the impression from Mr Ferreira’s evidence that they each had a better chance of obtaining residence in New Zealand if they each invested in a New Zealand business.

[40]     One of those companies was AHQ, which was incorporated to represent the legal and business interests of Ms Stockinger.   She became the sole director and shareholder of AHQ. The other company Agape Holistic Retreat Corporation (AHR)

was incorporated to represent the legal and business interests of Mr Ferreira.   He

21     Chen v Zhong HC Auckland CIV-2010-404-1995, 14 November 2011 at [37]–[42]. At the time this case was decided the High Court Rules did not specifically provide for formal proofs.

22     BBC Technologies Ltd v Sociedad Agricola Topagri Ltda [2014] NZHC 2386 at [5].

became  the  sole  director  and  shareholder  of  AHR.     Both  companies  were incorporated on 28 October 2004.  AHR was to carry on a retreat business and AHQ a horse stud business.

Relationship and Sums Provided

[41]     A brief outline of the relevant events is helpful to understanding the claims.  I have divided the relationship between the couple and the contributions provided at each stage of the relationship into four different sections: prior to 15 May 2005; from

15 May 2005 to September 2005; from September 2005 to May 2006; and from May

2006 onwards.   The account of events is taken from Mr Ferreira’s evidence.  I have taken into account affidavits of Ms Stockinger and the exhibits attached thereto insofar as this evidence was referred to by Mr Ferreira in his chronology to establish the sequence of relevant events.

Prior to 15 May 2005

[42]     Mr Ferreira and Ms Stockinger met in Germany in late 2003 and began a de facto relationship in January 2004.23    Mr Ferreira has two children from a previous marriage and Ms Stockinger has one child from a previous marriage.  They have no children together.

[43]     Mr Ferreira is an author.   Mr Ferreira states that at the start of the parties’ relationship, Ms Stockinger owned considerable assets “worth tens of millions of Euros” including shares in OVB Holding Corporation (a media and publishing holding company), a number of valuable pieces of real estate including a house with apartments in Berlin, a wind power facility, a horse stud farm and a number of valuable horses.

[44]     In January 2004, the couple viewed a mansion in Germany called Lichtung which they were interested in purchasing together.  They decided that Ms Stockinger would purchase the property in the name of Geoglobe Development Corporation.

Ms  Stockinger was  the  sole  shareholder of  this  company.    Ms  Stockinger later

23     I use the term to describe an emotional, personal, intimate relationship that involves sexual relations and periods of cohabitation.

purchased Lichtung in her own name.  The total purchase price of the property was

€1.8 million.   Mr Ferreira contributed €360,000 towards the purchase price.   This sum is made up of a payment of €310,000 to the notary in charge of the sale, €30,000 to  Ms  Stockinger’s  company  account  and  a  €20,100  cash  withdrawal  which Mr Ferreira said was given to Ms Stockinger to cover real estate agent’s fees.24

[45]      In March 2004, the couple viewed and decided to buy a Catamaran which was then in the process of being built.  They called the yacht “Agape”.  Mr Ferreira does not identify the country in which they viewed and purchased Agape however, it was purchased by Ms Stockinger at a cost of €1,800,000, which suggests it was purchased in a country other than New Zealand.   Mr Ferreira’s evidence is that Ms Stockinger said she would buy Agape as a present for him.  She paid the deposit but could not make the first instalment payment so Mr Ferreira contributed the

€300,000 (NZ$540,000) deposit towards the purchase price of the yacht.25   Later the

yacht was registered in the name of Agape Corporation Ltd, which was a company registered in both parties’ names in the Cook Islands.   In December 2006, Agape Corporation Ltd was transferred into Ms Stockinger’s sole name.

[46]     Between   May   and   September   2004,   the   couple   lived   together   at Ms Stockinger’s home in Germany.  They went to the Mediterranean on holiday in the yacht for five weeks beginning at the end of August 2004.

[47]     In  late October 2004  the couple visited New Zealand and looked at  the property  at  Orere  Point.   After  this  and  on  advice  from  New  Zealand  lawyers Hesketh Henry AHR and AHQ were incorporated.

[48]     On  1 April  2005, AHR  purchased  a  large  farming  property in  Gisborne

(“Mahutai  Park”)  for  $2.2  million.    Ms  Stockinger  contributed  €1,100,000,  or

$1,980,000, towards the purchase price of the property.

24     Bank account statements provided in evidence show that these transactions were made.

25     The conversion rate used is that provided by Mr Ferreira in his evidence and represents a ratio of NZ$1.80 per € which he states was the approximate exchange rate during 2005, when most of the Euro transactions occurred. A UBS bank statement shows that the deposit was paid on 19

May 2004.

[49]     On 4 May 2005, AHQ purchased the property at Orere Point Road for $11.5 million.  Bank statements show that Mr Ferreira paid $700,000 from his UBS Swiss bank account into Hesketh Henry’s trust account to be used towards the purchase price of this property.  $6,500,000 of the price was financed by a loan from BNZ. Ms Stockinger paid the balance.  To enable Ms Stockinger to make the final payment of $1,000,000 in August 2005 she borrowed a further $1,000,000 from the BNZ, which was guaranteed by AHR.

[50]     Mr Ferreira states that he spent a total of $221,400 for the benefit of Ms Stockinger between February 2004 and May 2005.  The amount claimed represents various payments relating to the upkeep for Litchung, expenses relating to the yacht, travel expenses and payments relating to Ms Stockinger’s horse stud, lawyers and employees.

[51]     From what I can see no receipts for these payments are in evidence.   The amounts claimed for each item are set out in a schedule to a letter written on 26 April

2007 from Mr Ferreira’s lawyers Rennie Cox, to Ms Stockinger’s lawyers at the time, Buddle Findlay.  This letter states that most, if not all of the amounts claimed can be substantiated by receipts if necessary.

[52]     During this time, Ms Stockinger made a number of financial contributions

towards Mr Ferreira’s costs and repaid amounts that he had advanced to her.  On 9

April 2005, she paid for flights for Mr Ferreira and his son to New Zealand, totalling

€16,000 or $28,800.   Ms Stockinger also gave him gold bars worth €21,000, or

$37,800 which he cashed on 31 March 2005.  Finally, she reimbursed him €20,000 or $36,000 and paid a €3,171.76 or $5,709.17 invoice for a tax lawyer on his behalf.

[53]     In total, including her contribution to the purchase price of Mahutai Park, Ms Stockinger   made   contributions   totalling   $2,088,309.17   for   Mr   Ferreira’s benefit.26   By contrast, Mr Ferreira alleged that he spent $2,109,580, leaving a total

inequality  of  contributions  of  $21,270.83.    However,  a  large  part  of  the  sum

26     This is taken from his evidence; as it amounts to an admission adverse to his interests I am prepared to rely on it.

Mr Ferreira claims he had then contributed was spent outside New Zealand and at a time when the parties were not living in New Zealand.

[54]   However, unless Mr Ferreira can prove that: (a) Ms Stockinger has acknowledged he contributed a sum of $2,109,580; (b) she represented she would repay  this  sum  to  him;  and  (c)  he  altered  his  position  in  reliance  on  that representation I am not prepared without hearing more from him to pay regard to spending that occurred either before the parties came to New Zealand or was made in relation to assets outside New Zealand.

15 May 2005 to September 2005

[55]    In May 2005 Mr Ferreira learned that the German tax authorities were investigating his tax affairs and that a warrant had been issued for his arrest.   He could not return to Germany.27   However, he went to Switzerland so that he could be close to Germany to allow him to sort out his tax affairs.

[56]     On 15 May 2005 Ms Stockinger emailed Mr Ferreira saying that she wished to end the relationship.   Mr Ferreira relies on this email as constituting an acknowledgement  from  Ms  Stockinger  that  each  had  made  roughly  the  same financial contributions.  She also records suffering cash flow problems.  In this email she said that:

I think we are almost on a par financially, we should just fix everything as well.    If  I take  the  payment for the  ‘litchtung’,  the  catamaran,  and  the missing some [sic] from Orere Point, then that is almost the purchase price of Mahutai estate.  Here we can make some exchanging loan agreements. …

[57]     However, this comment forms a small part of a large personal email that covers their relationship and other family members including their respective children, their parents and their former partners.  I read the email as suggesting how the parties might manage their affairs in the future rather than as expressing a firm view on the present state of their affairs or offering a way of resolving them.  This

view is confirmed by Mr Ferreira’s reply email, which includes the comments:

27     Mr Ferreira offered an explanation in his affidavit for why the German tax authorities were investigating him. However, it is no more than his opinion and accordingly it is inadmissible.

I know that we don’t have anything to settle up, totally the opposite, as you paid basically for everything anyway that that is something that I really appreciate.  Dani, you have always helped me, be it with the children, or in any other regard.   Even when I know and feel that you did everything willingly without even having to think it over, it wasn’t always so pleasant for me, as I would have preferred to have contributed more financially, so that you didn’t have the feeling that you always paid for everything.  For that reason you are entirely right and find your decision correct that we separate the business things.  This gives me as well a better feeling and then I don’t have to have mine dependent on you.

[58]     Mr Ferreira states that on 17 May 2005, having received Ms Stockinger’s email, he provided €100,000 to Ms Stockinger to alleviate her immediate financial difficulty.  Nowhere in the email of 15 May 2005 did Ms Stockinger ask Mr Ferreira for financial help, though she does outline the financial plight of Mr Ferreira’s father as  well  as  someone  called  Gunther.     A letter  written  by Mr  Ferreira’s  friend, Mr Dalcilic, on 23 April 2007 states that he received this amount in cash from Mr Ferreira in Switzerland and took it to Ms Stockinger in Germany.  Mr Dalcilic’s letter is hearsay evidence.  There is no contemporaneous record to confirm that Ms Stockinger either sought or received this sum of money for herself, let alone at all.  I am not prepared to treat Mr Dalcilic’s evidence as reliable in terms of s 18 of the Evidence Act 2006.

[59]     In late May or early June 2005 the parties resumed their relationship.  On 15

June 2005, Mr Ferreira says that he gave Ms Stockinger €35,000 in cash in Switzerland and asked her to make some payments on his behalf in Germany.  He was still unable to travel to Germany at this time.

[60]     Between May and September 2005, the couple travelled a fair amount.   In June 2005 they went to Switzerland.   In July they flew to New Zealand, to make arrangements in relation to the purchase of the Orere property and to Tahiti to visit the yacht which was anchored there due to storm damage.  In August 2005 they had a holiday in New Zealand.

[61]     On  2  August  2005  AHR  signed  a  $1  million  guarantee  over  AHQ’s obligations to the BNZ.  This guarantee was made in order for AHQ to be able to pay the last part of the purchase price due on the Orere Point property.  The guarantee was covered by a registered mortgage security that BNZ held over Mahutai Park.

The  mortgage  secured  all  monies  that  were  then  or  in  the  future  owing  either directing or indirectly to BNZ.

[62]     For the period from May to September 2005 Mr Ferreira states that he spent

$86,143.20  in  “miscellaneous  expenses”,  comprising travel  expenses for various people including a friend, Ms Stockinger, her daughter, nanny, Mr Ferreira and the yacht’s capital, and expenses for the yacht’s captain and skipper.

[63]     From my review of the evidence I can only see that $3,449.84 is substantiated by receipts.   Without  receipts  I would  not  be  prepared  to  accept  Mr  Ferreira’s testimony regarding the $86,143.20 he claims to have spent.

[64]     Ms  Stockinger  also  made payments  in  favour  of Mr  Ferreira during  the

period between May and September 2005 totalling €53,066, or NZ$95,519.

September 2005 to May 2006

[65]     In September 2005 the couple moved in to the Orere Point Property.

[66]     Between September 2005 and May 2006 Mr Ferreira states that he made numerous payments totalling $286,758.09 using his personal credit cards for or on behalf of AHQ for business purchases and expenses and to help with the company’s cash flow. AHQ in turn repaid $227,875.47 of the amount advanced by 2 May 2006.

[67]     During the same period, Mr Ferreira states his company, AHR, also made payments to AHQ and paid for legal fees amounting to $63,146.26. AHQ paid back the total $63,146.26 in three instalments.

[68]     Mr Ferreira points to the occasions when AHQ repaid sums advanced as evidencing  a  pattern  of  conduct  where  money  was  advanced  and  subsequently repaid, which in turn led him to expect that this is how things would continue when it came to future advances that either AHQ or Ms Stockinger received.

May 2006 onwards

[69]     From  May  2006, AHQ’s  financial  position  substantially  deteriorated  and BNZ began putting pressure on Ms Stockinger to sell her assets in Germany.  To this end Mr Ferreira states that he spent a large portion of the year overseas in an attempt to find buyers for the assets.

[70]     In May 2006, Mr Ferreira sailed in the yacht to Fiji, flew to Switzerland and met Ms Sockinger in Dubai in June 2006 before flying back to Switzerland.  He did not return to New Zealand until 23 October 2006.

[71]     Mr  Ferreira  claims  that  he  transferred  a  $10,000  payment  and  a  $250 payment from AHR to Ms Stockinger on 14 June 2006.   Ms Stockinger repaid

$10,000 to AHR on 4 July 2006.

[72]     On 7 August 2006, Mr Ferreira states that he transferred $260,000 to AHQ’s bank account.  An internet bank transfer of this amount at that time is shown in the company’s bank statements.

[73]     Mr Ferreira also claims credit card expenditure from May 2006 to January

2007.   The actual amount claimed is $147,578.42 though by my calculation this figure should be $113,314.91.  Of the amount claimed, all but six amounts are shown in Mr Ferreira’s credit card statements.  The remaining amounts, totalling $7,440, are made up of cash amounts or cash withdrawals, for which it is not possible to tell if they  were  used  for  the  purpose  claimed.    This  period  covers  the  time  when Mr Ferreira sailed to Fiji.  In his affidavit he states that he covered a lot of expenses on Ms Stockinger’s behalf associated with the voyage which he said was entirely for Ms Stockinger’s benefit as the yacht was being chartered in Fiji.  It also covers his time in Switzerland and Dubai.   Thus these expenses were incurred outside New Zealand.   Mr Ferreira  states  that  he has  not  halved any of the expenses as  he considers that they were incurred entirely for the purpose of meeting and negotiating with potential buyers of Ms Stockinger’s property.  Further, he states that, had it not been for Ms Stockinger’s pressing need for more cashflow and urgent need to sell her German assets, he would probably have spent the majority of 2006 in New Zealand.  He states that he would certainly not have incurred the high level of travel,

accommodation and other expenses that he did incur.  The amount claimed includes expenses such as equipment for the yacht, food and supplies, payments for the skipper, a number of dinner and business lunches, airline tickets for the skipper, Mr Ferreira and his friend, who accompanied him to help with finding buyers, as well as clothing, accessories and presents bought for Ms Stockinger and her daughter.

[74]     On 07 August 2006, while out of New Zealand, Mr Ferreira made a payment to Ms Stockinger’s caretaker in Germany for her unpaid wages.  Mr Ferreira’s bank statements show this transaction of €38,000.

[75]     On 29 September 2006 Mr Ferreira transferred $30,000 to Ms Stockinger. This transaction is shown in his bank statements.

[76]     Mr Ferreira returned to New Zealand on 23 October 2006.

[77]     Following Mr Ferreira’s  return  to  New  Zealand  on  23  October  2006,  in November 2006, the parties agreed to separate.  Mr Ferreira states that the separation was amicable, as by that time both parties had met other partners.  He alleges that Ms Stockinger agreed that he could live in the apartment at Orere Point with his new partner.  Mr Ferreira refurnished and moved into the apartment.

[78]     In November and December 2006 he states that the parties discussed and agreed to Mr Ferreira selling Mahutai Park so that the proceeds could be used, if needed, by AHQ until the proceeds from the sales of Ms Stockinger’s German assets came through.

[79]     A  file  note  from  Brent  Baldwin  of  Hesketh  Henry  lawyers,  dated  13

December 2006, is in evidence documenting a meeting where Mr Ferreira discussed repaying part of the BNZ mortgage in favour of AHQ in exchange for him becoming a shareholder in AHQ. The purpose of doing so, as documented by Mr Baldwin, was to enable Mr Ferreira to continue to satisfy the investment requirements necessary to support his application for residency in New Zealand.

[80]     There is also evidence that around November and December 2006 the BNZ were threatening a mortgagee sale of Mahutai Park.  AHR entered into an agreement to sell Mahutai Park for $1.95 million.  Mr Ferreira states that he sold Mahutai Park in reliance on assurances from Ms Stockinger that the proceeds would be available for AHQ  to  use  until  she  sold  her  “German  assets”.    He  also  states  that  Ms Stockinger offered him a security over Orere Point or a shareholding in AHQ, until she had reimbursed him for “all [his] payments.”  He says nothing about the fact that the bulk of the payment to acquire Mahutai Park was provided by Ms Stockinger.

[81]     On 18 December 2006 AHR executed a further guarantee of $1,820,000 of

AHQ’s indebtedness to the BNZ.

[82]     In January 2007, Mr Ferreira went on holiday to Fiji, leaving most of his possessions at the Orere Point property.  He attempted to return to New Zealand on

15 January 2007 but was told at the airport that he was unable to enter New Zealand as Immigration Officials had received a tip off that he was a “wanted criminal”. Mr Ferreira states that on 17 January 2007 he received a call from the BNZ about how  he  was  going  to  balance  his  accounts.     The  bank  informed  him  that Ms Stockinger had not given assurances to cover anything owing on his accounts. Mr Ferreira states that he called Ms Stockinger, who stated that if the bank needed anything, she would immediately give it.

[83]     On 19 January 2007 the BNZ informed Mr Ferreira that it would be blocking his credit cards.  The BNZ told Mr Ferreira that Ms Stockinger had alleged that: he owed her money; the couple had separated; Mr Ferreira was a wanted criminal;28 and he had left New Zealand and would not be returning because of problems with Immigration.  The BNZ said it was going to apply the net proceeds of the sale of Mahutai Park to the mortgage over Orere Point.  The bank was not prepared to wait

until the sale of Ms Stockinger’s  windmill farm, which was expected to  return

NZ$2,400,000 in February.  The bank also said that it would not reimburse AHR for

the amount applied to AHQ without Ms Stockinger’s consent.

28     This is in relation to the German tax authorities investigating his affairs.

[84]     Mr Ferreira states that when he called Ms Stockinger, she said that it was all a big mistake.  However, later she sent him a text stating that she never wanted to see him or talk to him again.

[85]     A number of emails sent from Ms Stockinger to Mr Ferreira are provided in evidence.  On 23 January 2007 she stated that “After everything goes smoothly, we could also ‘divide between us’ and maybe everything will get sorted out again after some  time.”    In  another  email  on  that  day  she  states  that  she  did  guarantee Mr Ferreira’s credit cards and that they were “being played” by the bankers.   She also stated that “I owe you money and you took over many costs lasts year” and then later:

Therefore, I believe it’s best now to end once and for all and part our ways.  I always wanted that in business, as you know. I never made a secret of it.  I would never have allowed a mishmash either, if it were not always the urgency and the pressure from the banks.  I already wrote to you that I want to count everything, and neither one of us should say in the end that he was betrayed, but right now the priority is to ensure my survival. I know I can’t hold you responsible for what I’ve done financially in the past years. …

[86]     A later email sent by her on 23 January 2007 states:

Don’t  forget  please  that  we  are  not  only  tied  commercially,  but  also privately.   To tell half-truths is also a lie.   Also, I don’t know what’s the point, as I said it’s something between us and no one can say precisely who owes whom what or not.  Making statements about it is not really that nice. It is correct that my things were paid with your transfers, but the rest of the time my funds were also taken to cover my and your costs, and if you really want a “War of the Roses”, then we can go through each receipt together with all bank that were involved.

…

[87]     The email ends by saying “so let’s just agree that we will separate our finance and part our ways.  Not in a hurry and half-truth but really honestly.”

[88]     In an email on 24 of January 2007 Ms Stockinger disputed the calculations that Mr Ferreira had made as to each party’s contributions stating “I always said I’d like to make a final calculation, it came from me, and I know that the numbers should work on both sides.”

[89]     When the sale of Mahutai Park settled on 1 February 2007 Mr Ferreira’s lawyers transferred the proceeds, being NZ$1,942,596.51, into AHR’s BNZ account. The BNZ then applied the funds to repay cheque and credit cards accounts of either AHR or Mr Ferreira with the balance of NZ$1,740,000 being transferred into AHQ’s BNZ account.  This was in settlement of AHR’s liability under the guarantee that it had given to the BNZ of AHQ’s indebtedness to the bank.

[90]     On 8 February 2007 Mr Ferreira received an email stating that the BNZ had closed his accounts due to unsatisfactory account history, lack of evidence of his financial position and ongoing doubts as to his residency.

[91]     On 9 March 2007 Ms Stockinger informed Mr Ferreira that she did not want him living on the Orere Point property.  On 11 March 2007 the caretaker informed him that his possessions had been put in boxes.

[92]     Mr Ferreira was permitted to return to New Zealand on 16 March 2007 though it is likely that he would have left again after his application for residence was refused in June 2007.

Background facts relevant to claim in conversion

[93]     This account is taken from Mr Ferreira’s evidence.

[94]     During the time that he was out of New Zealand, Mr Ferreira had left his possessions in the Orere Point Apartment.  Mr Ferreira states that while he was away he left the key to the apartment with the caretaker.  Ms Stockinger collected the key and entered the apartment.  He states that he later found out that she had uplifted his business records in January and given them to the German Tax Authorities.

[95]     On 21 March 2007 he was served with trespass notices.  Having attempted to negotiate to get his possessions back he eventually got some of them back on 21

March 2007. After correspondence between the parties’ lawyers, he was then able to send his agents to collect more of the possessions.  Of the possessions which were available to collect he contends that many were damaged beyond repair.  Further, a number of the possessions were missing, and some of the more valuable items had

been  replaced  with cheaper items.   His  computer drive was reformatted, which permanently deprived him of valuable software, photographs, emails, documents and scientific records.   He states that the total damage to property and the value of property not returned amounts to $300,000.

[96]     Mr Ferreira had left a purebred Arabian stallion, Esstashan, at the Orere Point property. Mr Ferreira attempted to get the horse back from Ms Stockinger in early

2007. Ms Stockinger initially stated that the horse was owned by AHQ as it was

listed  in  AHQ’s  accounts  as  an  asset  of  the  company.  On  27  April  2007

Ms Stockinger’s lawyers acknowledged that the horse belonged to Mr Ferreira and stated that she was prepared to release the horse upon him paying her the cost of shipping and costs for stabling the horse at Orere Point for 39 months and the cost of importing him to New Zealand.  She was thus claiming a lien on the horse for those costs.    The  total  claimed  was  $61,300.  This  was  later  increased  to  $63,400. Mr Ferreira agreed to pay this amount into a neutral trust account, to be held as a stakeholder by BDO Spicers.

[97]     However, it appears that the parties continued to dispute matters concerning the horse and Mr Ferreira was unable to repay the $63,400 to secure the horse’s release for some time.  In the meantime the parties agreed that the horse would be stabled at a horse stud, Landseer Stud, in Pukekohe. The arrangement with this horse stud  was  that  Esstashan  was  being  held  by  Landseer  Stud  as  an  agent  for Ms Stockinger. It agreed not to release the horse without written approval from Buddle Findlay.

[98]     Mr Ferreira paid the $63,400 to BDO Spicers on 5 September 2008 and the horse was released in late October 2008. Mr Ferreira claims the $24,819.03 he paid in stabling costs to Landseer Stud up until this time. Mr Ferreira also states that he had a buyer interested in the horse in early 2007, and that Ms Stockinger’s actions prevented him from selling the horse then and not incurring the stabling costs.

[99]     Two amounts are claimed for conversion: $300,000 for his chattels that were lost or damaged by Ms Stockinger; and $24,819.03 for stabling costs for Esstashan.

Earlier proceedings

[100]   In late 2007 Mr Ferreira brought summary judgment proceedings against AHQ through AHR, seeking to recover $1.74 million which it had received out of the sale of the Mahutai Park property.  AHQ opposed the application.  The Associate Judge  considered  that  the  defences  raised  by AHQ  involved  evidential  disputes which  meant  that  the  case  was  unable  to  be  determined  by  way  of  summary judgment.  He made a number of other comments about the proceedings as well but in my view the core reason for their dismissal was his finding that they were not suitable for disposition by way of summary judgment.   Thus the refusal to grant summary judgment cannot be equated with the dismissal of those proceedings.

[101]   In  2009 Mr Ferreira brought proceedings  in the Family Court under  the Property (Relationships) Act 1976.  Ms Stockinger denied that the parties had been in a qualifying de facto relationship and sought an order of security for costs.  A hearing took place on 11 March 2011 and Judge Burns delivered a judgment on

11 October 2011.  Judge Burns found that the pool of relationship property would be of a very limited value, and further that the arguments against the parties being in a de   facto   relationship   were   persuasive.      Judge   Burns   also   considered   that Mr Ferreira’s  impecuniosity  was  as  much  his  responsibility  as  anyone  else’s. Accordingly, he awarded security for costs against Mr Ferreira.

[102]   One of the reasons for the Judge’s decision to award security for costs was Ms Stockinger’s evidence as to the existence of a €1,100,000 loan in favour of Mr Ferreira  from  Ms  Stockinger  signed  by  Mr  Ferreira  on  9  September  2005. Mr Ferreira’s evidence in relation to this agreement is that Ms Stockinger created it using blank sheets of paper with his signature on it taken from his apartment.  He denies that the loan document is genuine.

[103]   After the present High Court proceedings against Ms Stockinger and AHQ were commenced an order was obtained removing the Family Court proceedings to the High Court and consolidating the proceedings.

Analysis

Equitable Estoppel

[104]   The first cause of action against the first defendant is based on equitable estoppel.    A unified  doctrine  of  equitable  estoppel  is  now  recognised  in  New Zealand, the underlying principle being that a party will not be permitted to deny any assumption, belief or expectation that it has allowed another to rely on where such a denial would be unconscionable.29

[105]   Estoppel can only be relied on where some action, representation or omission to act has been carried out by or on behalf of the defendant causing the plaintiff to have acted in a manner causing loss.30     In HHR Christchurch NTL Ltd v Crystal Imports Ltd the Court of Appeal found that, in the context of an appeal against a summary judgment where the plaintiff argued that the defendants were estopped from denying that its interest in a Hotel was insured, the plaintiff had to show:31

(a)       The  defendant  had  created  a  belief  or  expectation  through  some

action or representation that the plaintiff’s interests were insured;

(b)      The plaintiff’s belief or expectation was reasonably relied on;

(c)       The plaintiff would suffer detriment if that belief or expectation were departed from; and

(d)It would be unconscionable for the defendants to be allowed to depart from that belief of expectation.

[106]   To the extent that an express representation is relied on, this must be clearly and  unequivocally  expressed.32     In  relation  to  whether  the  expectation  was

reasonably relied on, this requires the belief or expectation to be reasonably held, it

29     See for example Fanshawe 136 Ltd v Fanshawe Capital Ltd [2013] NZHC 3395 at [49] citing

National Westminster Finance New Zealand Ltd v National Bank of New Zealand Ltd [1996] 1

NZLR 548 (CA) at 549.

30     Gold Star Insurance Co Ltd v Gaunt [1998] 3 NZLR 80 (CA) at 86.

31     HHR Christchurch NTL Ltd v Crystal Imports Ltd [2015] NZCA 283 at [44].

32     Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZLR 567 at

[44].

must have been reasonable for the plaintiff to rely on the belief, and their ongoing reliance  must  have  been  reasonable.33      Reasonableness  will  be  judged  by  the standard of a reasonable person in the particular circumstances.34   Accordingly, the fact that the representation arises in a family context as opposed to a commercial context will be relevant.35

[107]   Reliance on the representation may consist merely of the plaintiff abstaining from some course of action which they possibly would have taken if the representation had not been made.36

[108]   However, equitable estoppel is usually invoked to enforce non-contractual promises or representations.   This can be seen from a review of the relevant authorities.   When its requirements are satisfied equitable estoppel operates to fill what would otherwise be a legal lacuna, and in this way it provides a remedy when there would otherwise be none:37

The object of the equity is not to compel the party bound to fulfil the assumption or expectation; it is to avoid the detriment which, if the assumption or expectation goes unfulfilled will be suffered by the party who has been induced to act or to abstain from acting thereon.

If this object is kept steadily in mind, the concern that a general application of the principle of equitable estoppel would make non-contractual promises as enforceable as contractual promises can be allayed.

[109] The corollary of the above statement is that equitable estoppel has no application  when  an  established  common  law  cause  of  action  and  remedy  is available to rectify the detriment that would otherwise be suffered.   Unless this is recognised, equitable estoppel may impinge on areas where there are already well established remedies, particularly as equitable estoppel now operates as a cause of action as well as a shield.38   This is especially so when, as is the case here, equitable

estoppel is being used as a cause of action for which the plaintiff seeks equitable

33     James Every-Palmer “Equitable Estoppel” in Andrew Butler (ed) Equity and Trusts in New

Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [19.2.2].

34     See for example Travel Agents Association of New Zealand Inc v NCR (NZ) Ltd (1991) ANZ ConvR 553 (HC).

35     See Pollard v Pollard [2015] NZHC 1140 at [59]; and Harris v Harris (1989) 6 FRNZ 1 (HC).

36     Laws of New Zealand Estoppel: the Effect of Estoppel by Representation (online ed) at [49].

37     Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 423 cited with approval in

Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd, above n 32, at [84].

38     See Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd, above n 32, at [80].

damages as the remedy.  In such circumstances the enforcement of a promise to pay a sum of money that party A has provided by an award of equitable damages against party B, which is equivalent to the sum advanced, starts to look much the same as the recovery of an unpaid loan by an action for repayment of a debt.   Where the promise to pay was made by someone other than the party to whom the money was provided and it is not honoured those circumstances look very much like the circumstances that support an action for indemnity.   It is important, therefore, to ensure that the broad statements of principle in the case-law that outline the application of equitable estoppel are not simply applied to all circumstances that appear to fit literally within them.

The advances

[110]   The thrust of Mr Ferreira’s argument is that on numerous occasions he caused money to be advanced to Ms Stockinger and AHQ throughout the parties’ de facto relationship and that she created an expectation that she would repay those advances. I consider that it is important to examine each such occasion discretely.

[111]   The biggest advances that were allegedly made for Ms Stockinger’s benefit were when Mr Ferreira, acting on behalf of AHR, executed guarantees to the BNZ of AHQ’s indebtedness. There were a chain of such guarantees.

[112]   The first such guarantee was provided on 4 May 2005 when Mr Ferreira caused AHR  to  give  a  $1,000,000  guarantee  to  the  vendor  of  the  Orere  Point property.39 He alleges that he did so because Ms Stockinger represented to him that she was expecting to receive funds from the sale of her “German OVB” shares and when she did he would be reimbursed for any costs he had incurred as a result of her representations.40

[113]   A letter from Hesketh Henry dated 28 April 2005 reveals that when the Orere

Point property was purchased as the vendor could not give vacant possession on

39     See [8.4] of the first amended statement of claim.

40 See [9] and [10] of the first amended statement of claim.

settlement $1,000,000 of the purchase price was to be withheld.41   Letters exchanged between the solicitors acting for the vendor and purchaser show that at the time the vendor could not demand payment of this sum.  Initially, the deferred payment was to be held in a solicitor’s trust account, but then it was decided that AHR would guarantee this amount.  Mr Ferreira says that at the time Ms Stockinger did not have the funds to place in a solicitor’s trust account.

[114]   Subsequently when the vendor was able to provide vacant possession of Orere Point the deferred payment of $1,000,000 became due and payable.  At that time Ms Stockinger still had no funds to make the payment and so in August 2005

Mr Ferreira had AHR provide a guarantee of $1,000,000 to the BNZ to secure funds to make the deferred payment.

[115]   Although Mr Ferreira does not mention it in his evidence, the August 2005 guarantee by AHR was supported by a mortgage to the BNZ over Mahutai Park. This evidence is to be found in the affidavit of Nicholas Hanson who gave evidence for the BNZ in its opposition to AHR’s application for summary judgment.  A copy of Mr Hanson’s affidavit was annexed as one of the exhibits to the affidavit of Ms Stockinger dated 18 May 2010 which she filed in the Family Court proceedings. Those proceedings were transferred to this Court.  The evidence filed in the Family Court proceedings is now relied upon by Mr Ferreira to prove his claim in this proceeding.  Further, in the chronology he filed in this proceeding he at times refers to Ms Stockinger’s affidavit of 18 May 2010 and Mr Hanson’s affidavit which is attached as an exhibit to Ms Stockinger’s affidavit.  Since Mr Ferreira has chosen to rely  on  parts  of  Ms  Stockinger’s  affidavit,  which  includes  the  attachment  of Mr Hanson’s affidavit, I consider that I am at liberty to read Mr Hanson’s affidavit in its entirety, otherwise there is a risk that the passages to which Mr Ferreira refers will be read out of context.

[116]   The  BNZ  loan  was  short  term  and  it  was  repaid  by  Ms  Stockinger  on

3 February 2006.    However,  the  guarantee that AHR  had  provided to  the BNZ

remained alive.  Mr Hanson deposes that this guarantee was not discharged.

41     Someone associated with the vendor continued in residence in one of the dwellings on the property for some months.

[117]   In his affidavit dated 19 October 2009 Mr Ferreira deposes that because around  February 2006  Ms  Stockinger  wanted  funds  to  develop  Orere  Point,  he allowed the AHR guarantee to continue and so it was then used to support a further

$1 million loan from the BNZ to AHQ.  The BNZ referred to this loan as the number

3 loan.

[118]   The number 3 loan went into default when it was not repaid on 30 September

2006.  After 30 September 2006 the evidence of Mr Hanson shows that the BNZ wanted their loans repaid.  Further, Mr Hanson’s evidence reveals that Mr Ferreira was looking for a buyer for Mahutai Park and expected that when it was sold the proceeds would have to be applied to meet AHR’s obligations to the BNZ, which included the repayment of AHQ’s by then overdue loans.

[119]   AHR provided the BNZ with details of the prospective sale of Mahutai Park. When the BNZ learned that Mahutai Park was the subject of a sale and purchase agreement that was due to settle in January 2007 it sought to resolve the credit situation of AHQ by rolling its loans into one temporary overdraft which was to be covered, amongst other things, by a guarantee from AHR on the same terms as before, which included the mortgage security over Mahutai Park.   This guarantee was to support the current indebtedness of AHQ, which by then included:

(a)       accrued interest on the original loan to AHQ to acquire Orere Point

(the number 1 loan);

(b)accrued interest on the $1m loan to pay the balance of the Orere Point purchase price (the number 3 loan);

(c)       the unpaid principal of the number 3 loan, which stood at $1m; and

(d)ongoing  expenses  including  personal  advances,  credit  cards  and renovation work at Orere Point.

The total indebtedness came to approximately $1,820,000.   This led the BNZ to require AHR  to  provide  a  guarantee  of  up  to  $1,820,000,  which  was  in  terms identical to the earlier guarantee that was given on 2 August 2005.

[120]   In his affidavit dated 19 October 2009 Mr Ferreira deposes that he did not realise that on 18 December 2006 he signed a guarantee for AHR of AHQ’s debt up to the sum of $1,820,000.   He says he thought he was signing documents for the BNZ to do with the sale of Mahutai Park.  He does acknowledge, however, that he said to the BNZ that the proceeds of Mahutai Park could be used to repay AHQ’s debts to the BNZ.

[121]   In the amended statement of claim Mr Ferreira alleges that as a result of Ms Stockinger’s representations he did not try to halt the sale of Mahutai Park and instead allowed the sale to proceed, further he did not object to the BNZ applying the sale proceeds to reduce AHQ’s debt.

[122]   Also in his affidavit dated 19 October 2009 Mr Ferreira refers to discussions that he had with Ms Stockinger regarding the sale of Mahutai Park.  He describes it as the two of them coming to an agreement that as he and his new partner, Jasmine would now be living at Orere Point, he no longer needed Mahutai Park as a place to live.  He said that in this way the sale proceeds of Mahutai Park would be available for AHQ if needed until Ms Stockinger received loans she was going to obtain from overseas, and proceeds from the sale of her German assets became available.

[123]   Mr Ferreira deposes that Ms Stockinger referred to the money and help he had given her in the past and asked if he would be happy for her to give him a security over Orere Point, or a shareholding interest in AHQ until he had been completely reimbursed for all his payments.  He deposes “it was on this basis that I sought a buyer for AHR’s Mahutai Park property and entered into an agreement to sell it in mid/December 2006.”

[124]   Mr   Ferreira   also   deposes   that   “on   12   December   2006,   relying   on

[Ms Stockinger’s] assurances, I entered into an agreement to sell Mahutai Park for

$1.9 million so that some of the proceeds of the sale could be used to reduce AHQ’s

mortgage  debt  …”  pending  the  sale  of  Ms  Stockinger’s  assets  in  Germany. Mr Ferreira says he informed the bank he was doing this and that some of the proceeds could be used to reduce AHQ’s mortgage pending sale of Ms Stockinger’s assets in Germany.

[125]   Mr Ferreira further deposes that as a result of relying on Ms Stockinger’s assurance that she would give AHR security over the Orere Point property and would “square things up” later, he allowed the sale of Mahutai Park to  go ahead and “confirmed to the BNZ that the net proceeds after paying off my credit cards and AHR’s credit cards could be applied to the reduction of AHQ’s BNZ overdraft.” However in the same affidavit he also deposes that on 19 January 2006 he was informed by Ms Reardon of the BNZ that after balancing out all his personal and company accounts the BNZ would apply the remainder of the proceeds from the sale of Mahutai Park towards reducing the mortgage over Orere Point, which AHR had guaranteed.     The  reference  to  2006  must  be  a  typographical  error  as  the circumstances point to the contact with Ms Reardon being on 19 January 2007.

[126]   Then in a later affidavit dated 24 May 2013 Mr Ferreira deposes that had he known Ms Stockinger would not pay him back and deny he had any interest in Orere Point or that she owed him anything, he would never have agreed to sell Mahutai Park, nor to guarantee AHQ’s indebtedness to the BNZ in December 2006.

[127]   The  tenor  of  Mr  Ferreira’s  evidence  is  different  from  Mr  Hanson’s. Mr Hanson’s evidence shows that from 30 September 2006 onwards the BNZ was concerned that the existing level of indebtedness was not being repaid on time. Further, that from October 2006 onwards the BNZ was pressing for payment.  From August 2005 the BNZ had held a mortgage over Mahutai Park to support the guarantee given by AHR of AHQ’s indebtedness.  So, the BNZ was in a position to force the realisation of Mahutai Park, and to have the proceeds applied to reduce AHQ’s debt well before the new guarantee was executed on 18 December 2006.

[128]   On the other hand the way in which Mr Ferreira describes the situation it is as if he had a choice in December 2006 as to whether Mahutai Park was sold and how the sale proceeds would then be applied.

[129]   There is the separate matter of him saying on oath that he did not realise the papers he signed for the BNZ on 18 December 2006 included a guarantee of AHQ’s debts.  It is hard to see how in the affidavit dated 24 May 2013 he can claim he never would  have  given  the  BNZ  a  guarantee  in  December  2006  if  he  had  known Ms Stockinger would not repay him, when he had earlier deposed to not realising that he was giving this guarantee.  In this regard his evidence is not consistent.

[130]   The evidence of Mr Hanson shows that the BNZ was always in a position to demand the proceeds of the sale of Mahutai Park be applied to reduce AHQ’s debt to the BNZ, and that any sale of this property could not have proceeded without the agreement of the BNZ, given that it held a registered mortgage over that property.

[131]   It is clear to me from Mr Hanson’s evidence that at the relevant times AHQ’s indebtedness to the BNZ was not being repaid in accordance with the terms of the loans it had received from the BNZ.   Further, that the BNZ was becoming increasingly concerned  about  the  level  of  escalating  debt  and  wanted  it  repaid. Mr Hanson’s evidence shows that by late December 2006, when the BNZ realised the debt would not be repaid that year it sought to protect its position by getting further security to support the debt.  This included increasing the guarantee given by AHR, which was supported by a registered mortgage in favour of the BNZ over Mahutai Park.  Therefore, it seems to me that by 18 December 2006 when the last guarantee was given Mr Ferreira was in a position where he had little, if any, choice as to whether Mahutai Park was sold or not, and whether he gave a further guarantee or not.  As to the latter, I find his evidence that he did not realise he was signing a further guarantee to be implausible.

[132]   I am not satisfied, therefore, that the last guarantee of $1,820,000 was given as  a  result  of  representations  that  were  made  by  Ms  Stockinger.    I  have  the impression that if that guarantee had not been given the BNZ would have taken steps to realise what securities and guarantees it already held, so that the last guarantee was simply a means of forestalling such steps from being taken.  I consider that the more reliable evidence of events during this time is to be found in the affidavit of Mr Hanson and that Mr Ferreira’s account of why AHR sold Mahutai Park when it

did  and  why  the  sale  proceeds  were  applied  in  the  way that  they were  is  not plausible.

[133]   When the AHR guarantee was first given to the BNZ in August 2005 (of a sum up to $1,000,000) the circumstances at that time may support the view that the guarantee was given in reliance on Ms Stockinger’s promise to cover losses that were incurred.   However, the concern that I have here is how this can support Mr Ferreira bringing an action in equitable estoppel.

[134]   First, the party who was liable under the guarantee was AHR not Mr Ferreira. AHR is not a plaintiff in the proceeding.  Mr Ferreira suffered no direct personal loss as a result of AHR providing the guarantee.  To treat Mr Ferreira as suffering loss necessitates ignoring the separate legal identities of Mr Ferreira and AHR.   He provided no legal argument in support of such an approach, which entails a departure from well settled law.

[135]  Secondly, insofar as any promise Ms Stockinger made to reimburse the guarantor (ie AHR) for any loss it might suffer as a result of guaranteeing AHQ’s debts to the BNZ is enforceable that would be through a contract of indemnity, and not through equitable estoppel.

[136]   As to the first reason why I think the present action in equitable estoppel must fail, I consider that in the absence of legal argument to the contrary, of which there was none, it is important to maintain recognition of the separate legal identities of the natural and corporate persons who engaged in the actions that are now the subject of these proceedings.

[137]   Mr Ferreira provided no authority for why the parties’ disregard of AHR and AHQ’s separate legal personalities was itself a justification for piercing the corporate veil.  Instead he advanced arguments for piercing the corporate veil that were based simply on the fact that this was how they had conducted themselves in relation to the companies.

[138]   Mr Ferreira submits that it would be appropriate to treat transactions between the parties and their companies as being made by them personally because:

(a)      Ms Stockinger treated the parties’ assets as personal assets and their payments as personal payments in all their correspondence.   For example, in her emails she stated “I guaranteed” where she had to be talking about her company;

(b)The entire time that they were in New Zealand, Ms Stockinger used a company credit card for all personal and business expenses;

(c)      Ms  Stockinger  used AHQ  as  an  extension  of  herself  so  that  the company was no more than a sham.

(d)On 23 January 2007 she stated that there was a buyer for her German horse stud and “after everything goes smoothly we could also ‘divide between us’ and maybe everything will get sorted out again after some time”; he categorised these and her other assurances of financial matters being “sorted out” as being personal assurances that he would be  compensated  personally  for  the  financial  assistance AHR  was providing through its guarantee to the BNZ of AHQ’s indebtedness.

(e)      Ms Stockinger sought to rely on the doctrine of equitable estoppel when AHR brought civil proceedings against AHQ, claiming that the parties’ finances  and  their  companies’ finances  were  complicated, interconnected and intertwined and it would not be fair to look at the companies’ payments in isolation; here he asserted that those claims were the reason AHR’s summary judgment application was dismissed.

(f)      The advances made by Mr Ferreira or his company to Ms Stockinger or AHQ became his loses once AHR ceased to have any value and was put into liquidation.  Mr Ferreira claims that this was as a result of Ms Stockinger’s unconscionable conduct in January 2007 where she ensured that his bank accounts would be frozen, sent his business

documents to German Tax Authorities, and failed to guarantee his accounts with BNZ.

[139]   In Attorney-General v Equiticorp Industries Ltd (in stat man) the Court of

Appeal said:42

The phrase “to lift the corporate veil” is a description of the process by which in certain situations the Courts can look behind the corporate facade and  identify  the  real  nature  of  a  transaction  and  the  reality  of  the relationships created. It is not a principle. It describes the process, but provides no guidance as to when it can be used.

[140]   And in Chen v Butterfield Tipping J summarised the situation as:43

In essence the corporate veil should be lifted only if in the particular context and circumstances its presence would create a substantial injustice which the Court simply cannot countenance. Whether that is so must be judged against the  fact  that  corporate  structures  and  the  concept  of  separate  corporate identity  are  legitimate  facets  of  commerce. They  are  firmly  and  deeply engrained in our commercial life. If they are genuinely and honestly used they should not be set aside. In any event something really compelling must be shown to go behind them.

[141]   Courts  have  also  been  prepared  to  lift  the corporate veil  where  “special

circumstances exist indicating that it is a mere façade concealing the true facts.”44

[142]   In the present case, there is no doubt that AHQ and AHR were incorporated on the advice of New Zealand lawyers, Hesketh Henry, to carry on actual legitimate business ventures for the parties.  In this way Mr Ferreira and Ms Stockinger sought to satisfy New Zealand immigration requirements and requirements of the Overseas Investment Commission (OIC).

[143]   In  accordance  with  the  advice  from  Hesketh  Henry  two  New  Zealand registered companies were incorporated with Mr Ferreira owning the shares in one and Ms Stockinger the shares in the other.   The idea was to present both persons being investors in New Zealand. A letter written in May 2005 by Hesketh Henry

about the transactions they were involved in for AHR and AHQ states:

42     Attorney-General v Equiticorp Industries Group Ltd (in stat man) [1996] 1 NZLR 528 (CA) at

541.

43     Chen v Butterfield (1996) 7 NZCLC 261,086 (HC) at 261,092.

44     See for example Official Assignee v 15 Insoll Avenue Ltd [2001] 2 NZLR 492 (HC).

… when we were first instructed regarding the purchase of the Gisborne and Orere Point properties, we made it clear to Peter and Daniela that, in order to purchase each property, they would need to obtain consent of the Overseas Investment Commission (“OIC”) and that it would be very difficult to obtain such   consent   if   a   joint   purchase   of   both   properties   was   in   being contemplated. It was in fact out understating that (a) the Gisborne property was to be purchased and operated by Peter, and the Orere Point property by Daniela, and Peter and Daniela intended to work cooperatively by marketing the complementary facilities afforded by each property to their clients.

…

Our clear instructions were that Agape-Holistic Retreat Corporation Ltd was owned and funded by Peter, and Agape-High Q-Holistic Horsemanship Corporation Ltd was owned and funded by Daniela but we accept that the adoption of separate companies rather than a jointly owned company vehicle as the means of purchasing the properties probably reflected our earlier advice as to the difficulties of achieving OIC consent if a joint application was made.

This letter was written in response to a letter from a German lawyer who wanted to know if Mahutai Park would be held on trust for Ms Stockinger since she was the person who provided the funds to buy the property.

[144]   Later when Mahutai Park was to be sold Mr Ferreira’s evidence reveals that he was keen either to obtain an interest in AHQ or to invest through a security in the Orere Point property to maintain his investments in New Zealand as support for his application for New Zealand residence.

[145]   Thus,  I am  satisfied  that AHR  and AHQ  were  incorporated  for  genuine investment purposes in New Zealand.  The evidence suggests that both Mr Ferreira and Ms Stockinger squandered the financial resources of AHR and AHQ, but this cannot extinguish the genuine commercial reasons for their incorporation; they were legitimate business structures and not just sham companies.

[146]   The fact Mr Ferreira and Ms Stockinger treated each company’s funds as if they were their own personal funds cannot justify piercing the corporate veil.  Their failure to recognise their respective obligations as directors of each company as well as the companies’ separate legal personalities cannot now be used to the advantage of Mr Ferreira, or Ms Stockinger for that matter.

[147]   Nor do I accept that the way in which AHQ opposed the summary judgment application can now justify piercing the corporate veil in this proceeding.   The summary judgment application failed because the Associate Judge believed there was a defence.  He may have been led astray by misleading submissions from AHQ in this regard, however the appropriate response to that would have been for AHR to pursue the claim as an ordinary proceeding.  There was nothing at the time stopping AHR from pursuing an ordinary proceeding against AHQ, with the addition of the present   parties   and   the   appropriate   causes   of   action   so   that   there   was   a

comprehensive set of claims before the court.45    In this way inconsistent defences

and inconsistent outcomes would have been avoided.   Instead after summary judgment was refused AHR appears to have abandoned its claims against AHQ, and Mr Ferreira commenced the Property (Relationships) Act proceedings in the Family Court, which he has since in substance abandoned in favour of the present civil proceedings.

2.Mr Ferreira is solely responsible for the insurance of Esstashan and by copy of this email, Mr Ferreira, through his solicitors is on notice that suitable insurance arrangements must be made by him;

Please note that all of Ms Stockinger’s rights with respect to Esstashan are expressly reserved.

[186]   It appears from receipts provided in evidence that the horse was stabled with the third party between July 2007 and November 2008.

[187]   Mr Ferreira has not pointed to evidence showing how the agreement was reached.  However, from a letter sent by his lawyers on 5 June 2007, it appears that the stabling was his idea:

Peter proposes that Daniela places Esstashan in the custody of David Cole of IRT, on the basis that he will hold Essashan for Daniela (at Peter’s cost), until Daniela agrees to release him, or David Cole is supplied with a copy of a letter from BDO Spicers confirming that payment has been received, and the horse can be released.

[188]   Later correspondence sent from his lawyer shows that he at least agreed to this arrangement. A letter of 10 September 2008 describes the arrangement:

…  Subsequently,  the  agreement  was  varied  to  cover  a  slightly  larger payment, and the fact that the horse would be held by Landseer Stud at Mr Ferreira’s cost, but the agreement otherwise remained unchanged.

[189]   And a further letter of 22 September 2008 states:

Our client has acted in reliance on the agreement, to his detriment, and in doing so has performed his part of the bargain.

Your client is contractually obliged to release the horse. Refusal to release the horse will be taken as repudiation of the agreement.

[190]   Whilst Mr Ferreira reserved his rights as to whether he was liable to pay the

$63,400 claimed as a lien, there is no evidence to suggest that he disputed his responsibility for paying the stabling costs while Esstashan was held by the third party.

[191]   The essential features of conversion are:62

(a)       The  defendant’s  conduct  was  inconsistent  with  the  rights  of  the

owner or another person entitled to possession;

(b)       The conduct was deliberate; and

(c)       The conduct was so extensive an encroachment on the owner’s rights

as to exclude him from use and possession of the goods.

[192]   Conversion may be committed by wrongful retention of goods:63

Conversion may also arise in other ways, as where a defendant who innocently obtains possession of a chattel is shown to have an intention to retain it as against a plaintiff who has the immediate right to possession. In such a case a demand by the plaintiff and a failure to comply with the demand by a defendant is the usual, but not the only, means of establishing the defendant’s intent and the plaintiff may sue in detinue for the return of the specific chattel or in conversion for damages.

[193]   The plaintiff must first show that they have an immediate right to possession of the goods in question.  An immediate right to possession does not follow simply

62     Kuwait Airways Corp v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 (HL) at [39] and [42].

63     Cuff v Broadlands Finance Ltd [1987] 2 NZLR 343 (CA) at 346. See also Parry v Fassler HC Wanganui CIV-2011-483-97, 4 November 2011 at [20]–[24]; and Fassler v Parry [2012] NZCA

327 at [7].

because the plaintiff is the owner of the goods as “the tort of conversion depends upon the right to possession, not on title”.64

[194]   The existence of a valid common law possessory lien over goods is an answer to a claim of conversion.65   A common law lien is the right of one person to retain possession of the goods of another until that person’s claims are satisfied.  It depends upon  possession  of  the  goods  and  lasts  as  long  as  possession  is  retained.66

Accordingly, where there is a valid lien held over goods, as against the person holding the lien, the owner of the goods does not have the right to immediate possession because the right to possess those goods lies with the lien holder.

[195]   Here, Ms Stockinger claimed a lien over the horse, pending payment of the claimed debt of $63,400. The stabling costs were incurred between the time the lien was  claimed  and  Mr  Ferreira’s  payment  of  this  money.    Throughout  this  time Ms Stockinger asserted her control over and did not relinquish possession of the horse.

[196]   Ms  Stockinger  may  not  have  a  valid  claim  for  a  lien  over  the  horse. However, the right to immediate possession is an essential element of the cause of action of conversion and Mr Ferreira was required to show whether he had the right to immediate possession.  Accordingly, I consider that by not addressing the validity of the claimed lien, Mr Ferreira has failed to do this.

[197]    In addition, Mr Ferreira faces the difficulty that he agreed to the arrangement under which he was liable for the stabling fees.   I consider that the effect of the arrangement was that Mr Ferreira forfeited any right to possess the horse until he had paid the $63,400 to BPO Spicers.67

[198]   Mr  Ferreira  faces  a  further  hurdle  concerning  the  damages  claimed. Damages available in conversion are to compensate for loss suffered.   The usual

64     Parry v Fassler, above n 63, at [26].

65     See for example United Plastics Ltd (in liq) v Reliance Electric (NZ) Ltd [1977] 2 NZLR 125 (SC).

66     Waitomo Wools (NZ) Ltd v Nelsons (NZ) Ltd [1974] 1 NZLR 484 (CA) at 490.

67     In  Parry v  Fassler, above n  63,  a  contract for  the  plaintiff ’s  beehives to  be  kept on the defendant’s land was held to result in the plaintiff not having the right to immediate possession of the beehives at [31].

measure of damages is the market value of the goods, as this generally represents the loss suffered by the plaintiff.68    However here, as Mr Ferreira recovered ownership of Esstashan, the loss claimed is the consequential loss for the stabling costs.   To recover damages for consequential loss the plaintiff must show the necessary causation; the wrongful conduct must have been a substantial or proximate cause of loss and questions of mitigation and remoteness may be relevant:69

This guideline principle is concerned to identify and exclude losses lacking a causal connection with the wrongful conduct. Expressed in its simplest form, the principle poses the question whether the plaintiff would have suffered the loss without (“but for”) the defendant’s wrongdoing. If he would not, the wrongful conduct was a cause of the loss. If the loss would have arisen even without the defendant’s wrong doing, normally it does not give rise to legal liability …

[199]   Although it is not mentioned in the amended statement of claim, it is clear that Mr Ferreira considers he can recover the stabling costs because he would not otherwise have incurred them as he would have been free to sell the horse.70    He states in his affidavit that he had a buyer interested in Esstashan in early 2007 for

250,000 Swiss Francs.   However, this is not mentioned in the letters between the parties in 2007 provided in evidence.   Mr Ferreira has not pointed to any other evidence  to  support  the  claim  that  a  buyer  was  interested,  or,  if  he  was,  the timeframe in which a sale would have been completed.  In the event that Mr Ferreira did not have a buyer available immediately, he would have had to pay to stable Esstashan himself.

[200]   Accordingly, Mr Ferreira has not satisfied me that he would not otherwise have   incurred   the   stabling   costs   and   that   the   costs   can   be   attributed   to Ms Stockinger’s conduct.  For this reason, even if Mr Ferreira had established a right

to possess the horse, the damages claimed for the stabling amount must fail.

68     See Stephen Todd (ed) The Law of Torts in New Zealand (6th ed, Thomson Reuters, Wellington,

2013) at [12.3.04]

69     Kuwait Airways Corp, above n 62, at [72] as cited in Glenmorgan Farm Ltd (in rec and in liq) v

New Zealand Bloodstock Leasing Ltd [2011] NZCA 672, [2012] 1 NZLR 555 at [76].

70     Absent the prospect of an early sale of Esstashan, Mr Ferreira would have been obliged to incur stabling costs for the horse as the horse needed to be maintained.  Further, it was Mr Ferreira who suggested Esstashan be stabled with David Cole of IRT so he can hardly complain that those costs were too expensive.

[201]   As regards the allegation that Ms Stockinger took a blank sheet of paper with Mr Ferreira’s signature on it and used this to fabricate evidence it is difficult to see how what is essentially a fraud allegation can amount to the tort of conversion.  The losses that are alleged to have flowed from that action have no direct connection with any estimated market value that could be placed upon the blank sheet of paper

bearing Mr Ferreira’s signature.71

[202]   As regards the claim for conversion of chattels of $300,000 in value, the general requirements for pleading a claim for conversion are that:72

The goods should be described in the statement of claim with sufficient certainty to inform the defendant what goods he is charged with having taken; but it is not necessary to specify the goods item by item provided they are particularised by description, value and the dates between which it is alleged that they were converted.

(Emphasis added).

Thus more is required than the bare allegation that chattels to the value of $300,000 have been converted.

[203]   The general rule for assessing the value of converted chattels for the purpose of an award of damages is to take their market value at the time of the conversion.73

If the market value has increased since the conversion there are occasions when the increased value may be recovered as damages.74    When the market value has decreased since the time of conversion the recoverable damages may still be assessed at the market value when converted.75     It is, therefore, essential to identify the chattels alleged to have been converted not only for the purpose of good pleading but also in order for a value to be placed on them to enable an award of damages to be made.

[204]   In the present case Mr Ferreira has pleaded that $300,000 worth of chattels were converted without identifying them or attributing a market value to them.  His

71     See discussion at [198] and [199].

72     Jacob, above n 47, at 356 citing Brightside Co-operative Society v Phillips [1964] 1 WLR 185.

73     Harvey McGregor McGregor on Damages (19th ed, Sweet and Maxwell, London, 2014) at [36-

006].

74     At [36-014]–[36-021].

75     At [36-014]–[36.021].

affidavits non-exhaustively list numerous chattels that he says were converted, and he deposes as to the price that he paid to acquire some of those chattels.  It appears to me, therefore, that the value he places on those chattels is taken from the prices he paid to acquire them, which pays no regard to their actual market value at the time of the  alleged  conversion.   Apart  from  his  own  evidence  there  is  no  evidence  of attempts to place a market value on the chattels.

[205]   The claim based on conversion is badly pleaded.  It fails to provide a proper basis for the proof of this tort.   Further such omission cannot be made good by reference to the evidence.

[206]   In 1998 the Court of Appeal in Price Waterhouse v Fortex Group Ltd,76 described pleadings as an “essential road map for the Court and for the parties.”  In saying this, the Court of Appeal rejected the idea that the exchange of briefs of evidence before trial could cure any lack of particularity in the pleadings:

It has become fashionable in some quarters to regard the pleadings as being of little importance. There was an echo of that approach in the implicit suggestion floated in this case that exchange of briefs of evidence before trial might be seen as curing any lack of particularity in the pleadings. Any such view is misguided. Pleadings which are properly drawn and particularised are, in a case of any complexity, if not in all cases, an essential road map for the Court and the parties. They are the documents against which the briefs of evidence are or should be prepared. They are the documents which establish parameters of the case, not the briefs of evidence.

We are not casting aspersions on the pleadings in this case which, leaving aside issues about necessary particularity, are well drawn on each side. Nor are we advocating a pedantic approach to the topic. Pleadings should be read as conveying what they would reasonably convey, in the context of the case, to a sensible legal mind. Even less are we advocating prolixity of pleadings, or  the  raising  of  every  conceivable  cause  of  action  irrespective  of  its potential for success; this type of pleading often contains the additional flaw of overlooking R114 which requires each cause of action to be separately pleaded. What we are saying is that both the Court and opposite parties are entitled to be advised of the essential basis of a claim or defence, and all necessary ingredients of it, so that subsequent processes and the trial itself can be conducted against recognisable boundaries. Neither the Court nor opposite parties should be placed in the position of having to deal with a proposition of whose substance adequate notice has not been given in the pleadings.

76     Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998 at 17–18.

[207]   Pleadings have a different role from evidence which is one of the reasons why evidence cannot serve as a replacement for a properly pleaded statement of claim or defence.  Pleadings discharge the requirement for fair notice of an opposing party’s case by operating to define and to delimit the real matters in controversy between the parties.77  A statement of claim should achieve these purposes:

a)       Inform the defendant of the case she has to meet by pleading all material facts on which the plaintiff relies to establish a legally complete cause of action;

b)       Enable the defendant to know the evidence she needs to prepare;

c)       Focus on the real issues of the case; and

d)       Tie the parties to the case they have set out in advance of the trial. [208]   Evidence on the other hand is how the plaintiff proves the material facts

relied upon in the pleading.  So, strictly speaking if a party’s evidence goes further than what has been pleaded that evidence will be irrelevant.   It is hard to see, therefore,  how  a  plaintiff  who  has  failed  to  provide  a  properly  particularised statement  of  claim  can  expect  to  remedy  this  by  reliance  on  the  necessary information being found in his evidence.

[209]   The general rule is that when there is a difference between a statement of claim and the briefs of evidence of the plaintiff, with the latter going further than what is stated in the pleadings, it will be necessary to amend the pleadings to bring them into line with the evidence.  In Club Marina Apartments Ltd v McHugh Lang J stated:78

[13]      It is axiomatic that the Court must decide a case in accordance with the pleadings.     Counsel for Club Marina referred me to the following statement of principle from Otaki Tyre Service Centre Ltd v Whittaker & Ors HC WN CIV-2001-485-978 11 December 2007 where McGechan J said:

[24]     As a matter of established practice, cases must be decided as pleaded.     A court cannot decide a case upon evidence or arguments falling outside pleadings.     Where

77     Jacobs, above n 47, at 3.

78     Club Marina Apartments Ltd v McHugh (2008) 9 NZCPR 662 (HC).

there  is  a  difference  between  pleadings  and  evidence, amendment of pleadings is required.

[210]   Lang J was hearing the case as an appeal from the District Court.  The Judge in the District Court had decided that the comments by the real estate agent were a breach of the Fair Trading Act 1986.  Lang J rejected that finding on the ground:

[26]     … In deciding the case on the basis of the agent’s statements, the Judge went beyond the pleadings and the basis upon which the case for Ms McHugh had been run at trial.  In doing so, I consider that he fell into error.

[211]   I am satisfied, therefore, that I cannot bolster what is an inadequately pleaded cause of action by drawing on Mr Ferreira’s evidence to fill the voids in his pleading. It follows that the claim for $300,000 damages for conversion of chattels must fail.

Claim for orders under the Property (Relationships) Act

[212]   The fourth cause of action in the first amended statement of claim is for a series of orders under the Property (Relationships) Act.  Mr Ferreira accepts that he and Ms Stockinger were in a de facto relationship of short duration in terms of s 14A of the Act.  Because they did not have children together, the only way in which the Act could be applied to their relationship was if he could establish that he had made substantial contributions to the de facto relationship.

[213]   The fourth cause of action pleads a series of ways in which Mr Ferreira alleges that he made substantial contributions to the relationship.  However, at the formal  proof  hearing  Mr  Ferreira  elected  to  pursue  his  civil  claims  against Ms Stockinger.  In his submissions to this Court he essentially abandoned seeking to recover under the Property (Relationships) Act the financial contributions he alleges that he had made.  He relied instead on the remedies sought in the civil causes of action to reimburse him for those contributions.  However, he still sought the orders in paragraphs (a) and (b) of his fourth cause of action. These are:

(a)      an order declaring that the plaintiff and the first defendant were in a de facto relationship of short duration within the meaning of s 14A of the Property (Relationships) Act 1976; and

(b)an  order  granting  leave  to  bring  a  proceeding  against  the  first defendant under the Property (Relationships) Act 1976 in respect of a relationship of short duration under s 14A of the Property (Relationships) Act 1976.

[214]   The reasons he gave for seeking those orders are that:

(a)      This aspect of his claim was strenuously denied by Ms Stockinger in the Family Court proceedings and so caused him to incur substantial costs and delayed for over five years before the present proceedings were commenced;

(b)Ms Stockinger had previously claimed the parties had been in a de facto relationship in the High Court proceedings brought by AHR against AHQ and this claim was a significant factor in those proceedings not being successful;

(c)      A substantial part of the solicitor/client costs sought by Mr Ferreira in this proceeding relates to attendances in the Family Court in relation to the proceedings brought under the Property (Relationships) Act

1976; and

(d)Mr Ferreira sought findings of fact on the issue for personal reasons as he “seeks vindication of the position he took in the Family Court proceedings.”  It is an issue he feels strongly about.

[215]   The question to be determined under s 14A of the Property (Relationships) Act is not whether the parties were in a de facto relationship, but whether it is one that qualifies for a property division to be determined under that Act.   For that to occur here, Mr Ferreira has to establish that he made substantial contributions to the relationship.

[216]   Mr  Ferreira  argues  that  he  advanced  approximately  $2,834,421.60  to

Ms Stockinger or to AHQ.  However, the whole thrust of his claim in this proceeding

is that the $2,834.421.60 was advanced to either Ms Stockinger or to AHQ with the belief and in reliance on promises from her to repay that money.  When the advances that he made are viewed in this way, they cannot be seen as a substantial contribution to the relationship.   Such a contribution is something that is spent without an expectation of repayment.   If the relationship ends the party who has made the substantial contribution can then seek to be given some recognition through remedies available to him or her under the Act.  But when advances have been made, which from the very outset were made with the expectation they would be repaid, such advances cannot qualify in my view as contributions to the relationship, particularly when their repayment is sought in civil proceedings rather than under the Property (Relationships) Act.  Here Mr Ferreira has sought to obtain judgment on the strength of his civil claims; it is logically contradictory for him also to seek the type of orders that he seeks under the Property (Relationships) Act as well.

[217]   There is the added problem that for him a substantial portion of the funds (at least $1,740,000) he claims as part of his contributions were in fact the funds that AHR lost by virtue of the guarantee it gave to the BNZ of AHQ’s debt.  This cannot be viewed as his contribution to the de facto relationship.  I am satisfied, therefore, that there is no basis to warrant me making the orders Mr Ferreira seeks under the fourth cause of action.

Conclusion on claims against Ms Stockinger

[218]   As matters have turned out, I have found Mr Ferreira’s civil claims have failed.   But that is because on the analysis I have taken of the causes of action pleaded  I find  that  they are not  sustainable.    Had  the  claims  been  brought  for indemnity or for loans advanced by him to Ms Stockinger depending upon whether the promises he relied upon were made (a) by her to him for money advanced to her (a loan); or (b) by her to him for money he caused to be advanced to AHQ (an indemnity) he may have been able to prove such claims.  Though he would still have faced a problem establishing his standing to bring such claims regarding advances that were in fact made by AHR.

[219]   It follows that all causes of action against Ms Stockinger are dismissed and judgment on those causes of action is entered for Ms Stockinger.

Claims against AHQ

[220]   Mr Ferreira makes a claim in equitable estoppel against AHQ relying on the same conduct  that  he pleads  in  relation  to  Ms  Stockinger.    He seeks  equitable damages in the sum of $1,740,000.  This is the sum of money that was applied from the proceeds of the sale of Mahutai Park by the BNZ under the guarantee given by AHR of AHQ’s indebtedness to the BNZ to repay that debt.  The reasons that I have given for refusing to allow the claim for equitable estoppel in Mr Ferreira’s first cause of action against Ms Stockinger are equally applicable here.

[221]   AHQ would have been liable to reimburse AHR for the losses that it suffered as a result of AHR guaranteeing AHQ’s debt.  The fact that AHR failed to establish this liability in its summary judgment application against AHQ does not mean it would have failed in an ordinary proceeding.  However, it was for AHR to bring this claim, not Mr Ferreira.

[222]   Any promises that Ms  Stockinger made on behalf of AHQ to reimburse Mr Ferreira for losses that he might suffer through AHR guaranteeing AHQ’s debts would  be  recoverable  as  an  indemnity.    The  same  would  also  be  the  case  if Ms Stockinger made the promises in her personal capacity.

[223]   It follows that Mr Ferreira has no claim against AHQ based on equitable estoppel.   Accordingly  the  first  cause  of  action  against AHQ  is  dismissed  and judgment is entered for AHQ.

Second cause of action against AHQ

[224]   Mr Ferreira did not seek judgment for the second cause of action against AHQ. Accordingly that cause of action is also dismissed and judgment is entered for AHQ.

Conclusion

[225]   Mr Ferreira has failed to prove the causes of action in the first amended statement of claim.   Accordingly they are dismissed and judgment is entered for Ms Stockinger.

[226]   As I have found in Ms Stockinger’s favour r 15.11 does not apply and this

judgment may be sealed in the usual manner.