First Mortgage Custodians Limited v Herbert
[2022] NZHC 507
•22 March 2022
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE
CIV-2021-441-38
[2022] NZHC 507
BETWEEN FIRST MORTGAGE CUSTODIANS LIMITED
First plaintiffFIRST MORTGAGE MANAGERS LIMITED
Second PlaintiffAND
ANTHONY JAMES HERBERT and
STEPHEN PETER LUNN as trustees of the Thackery Trust
First Defendants
ANTHONY JAMES HERBERT and ELIZABETH LILLIAN HERBERT as
trustees of the Herbert Pukawa Trust Second Defendants
ANTHONY JAMES HERBERT, FIONA HERBERT and
STEPHEN PETER LUNN as trustees of the A J and F Herbert Family Trust
Third Defendants
MALCOLM HERBERT and
STEPHEN PETER LUNN as trustees of Avenue Road Trust
Fourth Defendants
ANTHONY JAMES HERBERT and
STEPHEN PETER LUNN as trustees of Charles Street Trust
Fifth Defendants
MALCOLM HERBERT
Sixth DefendantANTHONY JAMES HERBERT
Seventh Defendant
FIRST MORTGAGE CUSTODIANS LIMITED v HERBERT [2022] NZHC 507 [22 March 2022]
MAH ENTERPRISES (FIJI) LIMITED
Eighth Defendant
MALCOLM HERBERT and
STEPHEN PETER LUNN as trustees of Thorn Place Trust
Ninth Defendants
CIV-2021-441-43 BETWEEN
FIRST MORTGAGE CUSTODIANS LIMITED
First PlaintiffFIRST MORTGAGE MANAGERS LIMITED
Second Plaintiff
AND
ANTHONY JAMES HERBERT and FIONA HERBERT and
STEPHEN PETER LUNN as trustees of the AJ and F Herbert Family Trust Defendants
Hearing: 6 December 2021 Appearances:
D M Fraundorfer for plaintiffs in both proceedings
D J O’Connor for defendants in all proceedings other than for Fiona Herbert
G Richards for Fiona HerbertJudgment:
22 March 2022
JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
Introduction and background
[1]These are summary judgment applications.
[2] The plaintiffs in both proceedings are First Mortgage Custodians Ltd, the trustee of an investment fund, and First Mortgage Managers Ltd, the manager of the fund. It is common ground that, between them, they have standing to sue in relation
to contractual arrangements with the defendants. In the balance of this judgment First Mortgage Custodians and First Mortgage Managers are referred to collectively as “the plaintiffs” or “First Mortgage”. The defendants are or were all connected to the Herbert family, members of which have been involved in a significant property development venture in Napier.
[3] At the heart of both proceedings are loan arrangements entered into in May 2018 to replace pre-existing arrangements between another financier and the first defendant trustees, pursuant to which the plaintiffs lent the first defendant trustees approximately $9m in order to finance the completion of the development. The plaintiffs say that the obligations of the first defendant trustees were originally guaranteed by the second to eighth defendants. They say that these arrangements were varied in September 2019 (at which point the ninth defendants became involved as additional guarantors), and that a dispute between the parties as to their respective rights and obligations under the varied arrangements was settled in December 2020.
[4] They say that an amount is now overdue for payment by the first defendant trustees, and therefore that the obligations of the guarantors in relation to this outstanding balance have also been triggered. In the first proceeding (the 38 proceeding), the plaintiffs seek summary judgment against the first defendant trustees as borrowers and the second to ninth defendants as guarantors for the sum said to be outstanding together with interest and costs. In the second proceeding (the 43 proceeding), they seek summary judgment entitling them to foreclose on a mortgage they say was provided by the third defendant trustees in support of their guarantee.
[5] That is a truncated summary of the factual background and the nature of the two claims. In his written submissions, Mr Fraundorfer for the plaintiffs summarised the factual background in detail. Neither Mr O’Connor for the first defendant trustees and the majority of the guarantors, nor Mr Richards for the second-named third defendant trustee, Mrs Fiona Herbert, took issue with this summary, at least to the extent that it deals with core facts. To the extent that it includes assertions or assumptions as to the legal position and the respective rights and obligations of the parties (for example, as to the enforceability of any guarantee apparently given by the
third defendant trustees) the parties are at odds. However, with that qualification, I gratefully adopt Mr Fraundorfer’s summary:
Loan Agreement
2.3The relevant lending facility (known as the “Thackeray Loan”), was taken out in May 2018 as a fixed term, interest-only construction lending facility to be used for the development of a hotel on 36 Munroe Street, Napier (Hotel). In May 2018, FMT entered into a loan agreement with the first defendant (Thackeray Trust) secured by a first-ranking mortgage over the Hotel. The loan was guaranteed by the second to eighth defendants (Guarantors). A number of the Guarantors provided their residential properties as further security. This loan was negotiated by commercial parties, via third party advisers.
2.4On 30 May 2018, a principal sum of $9.34million was “advanced”, refinancing a previous loan from ASB and making funds available to be drawn down for interest, construction costs and other costs under the loan documents. It was for a fixed term until 10 March 2021. The Thackeray Trust had extensive obligations to FMT relating to construction, such as obtaining code compliance by 1 March 2019 and to proceed with construction in a workmanlike manner until completed.
2.5There was a separate loan structure (Thorn Loan) with cross collateralised security. FMT was granted summary judgment for the Thorn Loan on 3 November 2020.
2.6Around September 2019, FMT had concerns about the cost and progress of construction. The facility had been used and the project was not complete. FMT, Thackeray Trust and the Guarantors agreed to extend the Thackeray Loan. The varied terms included that the Principal Sum was increased to $11.163mill; the sunset date contained in the lease between the Thackeray Trust and USAR Napier Limited (“USAR”) was extended to 31 March 2020; the time for code compliance to issue was extended to 1 March 2020 (CCC Date); and the Thorn Trust was added as a Guarantor, providing further security.
PLA Notices in 2020
2.7By March 2020, no code compliance certificate had been issued, amongst other construction defaults. FMT therefore issued notices under s 119 and 121 of the Property Law Act 2007 (PLA) dated 23 March 2020 (2020 Notices). In response, the defendants dispute the validity of the 2020 Notices
2.8Summary judgment proceedings were filed, and FMT concurrently advertised some of the secured properties for sale by tender process. This process was halted by without notice injunction orders obtained on 24 July 2020 by Thackeray Trust and the Guarantors. The summary judgment applications proceeding to hearing on 22 September 2020. Honour Associate Judge Johnston issued his judgment, granting summary judgment orders in the Thorn Proceedings but declining summary judgment in Thackeray (2020 Proceedings).
Settlement
2.9On 18 December 2020, FMT and the defendants agreed upon an arrangement (Settlement Agreement) whereby all secured properties except the Herbert Family Trust’s property at 27 Wheatley Road (Property) were to be refinanced with an initial payment ($11.508 million) payable on 18 December 2020 (Initial Repayment). On receipt, FMT would discharge the mortgage securities. In February 2021, Thackeray Trust would remove the injunction orders in relation to the Property, if required. Further, it was agreed the Property was to be refinanced by the end of January 2021 with payment to FMT of $1.016 million (Refinance Payment). All PLA Notices and guarantees were to remain in place until FMT was paid in full. In the event that FMT did not receive payment, the 2020 Notices could be acted on and FMT would continue with enforcement. FMT has now discharged its mortgages over all properties save for the Property and the general security agreement (guarantees remain in place).
2.10FMT received the Initial Repayment in December 2020, however they did not receive the Refinance Repayment. Nor was the Property was refinanced by 31 January 2021. Thus at 1 February 2021, the Thackeray Trust and Guarantors were in breach of the Settlement Agreement in two separate grounds. Conflict between the trustees of the Herbert Family Trust came to a head on 2 February 2021, with counsel for the defendants ceasing to act for Ms Herbert. It appears that Ms Herbert was the reason for the delayed refinance (and consequent breach of the Settlement Agreement). Regardless, FMT has been left in a position of vulnerability in relation to the Property.
Expiry of term / 2021 Notices
2.11Matters got worse. From 10 January 2021, all interest repayments from the defendants ceased. Now (since 10 March 2021), the term of the Thackeray Loan has expired, meaning that all amounts owing under the loan and secured by the Property are due and payable. The outstanding amount under the Thackeray Loan as 29 March 2021 was approximately $2.7mill, which includes default interest payments due in January and February 2021, yet FMT was prevented from selling the Property under the 2020 Notices.
2.12Prior to the summary judgment hearing, FMT had applied to rescind the injunction orders. This went to hearing on 24 March 2021. The Thackery Trust and all Guarantors (except for Ms Herbert, referred to as the “Group”) did not oppose FMT’s application. Resolution was reached at the hearing between FMT and Ms Herbert, being that the injunction orders would remain in relation to the 2020 Notices. This was on the understanding that further PLA notices could and would follow on different defaults.
2.13As a result, FMT issued a new s 119 PLA Notice to the Herbert Family Trust on 29 March 2021 (2021 Notice), with notice to the Guarantors under s 122. There were three defaults: (1) the expiry of the loan term,
(2) non-payment of ordinary interest for January and February 2021 and (3) non-payment of penalty interest for the period 10 February 2020 to 10 March 2021. The notices required payment of $2.707mill
by 8 June 2021. Further demand was made to the Guarantors on 3 May 2021. Payment has not been received in part or in full.
2.14In response to the 2021 Notice, on 4 May 2021 the Group sought to pay the $1.016mil. The time to pay this reduced sum had expired two months prior, and FMT had been forced to further litigate the matter regarding the injunctive orders which should have been removed. FMT understandably refused to accept $1.016mil and required payment in full.
[Footnotes omitted.]
Summary judgment principles
[6]Summary judgment is provided for in pt 12 of the High Court Rules.
[7]Materially, r 12.2 provides:
12.2 Judgment when there is no defence or when no cause of action can succeed
(1)The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
(2)The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff’s statement of claim can succeed.
[8] The leading authority is Krukziener v Hanover Finance Ltd where the Court of Appeal said:1
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is not consistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26]–[27].
Under r 141A the defendant need not file a statement of defence. The onus remains on the plaintiff, and summary judgment will be denied if on the hearing of the application it appears that there is an issue worthy of trial.
[9] In the end, then, it is for the plaintiff (in the case of a plaintiff’s application) to satisfy the Court that there is no arguable defence to the claim, or the relevant aspect of the claim.2 Although the onus is on the plaintiffs throughout, if the defendant contends that there is an available defence, he, she or it must be able to point to an evidential foundation establishing an issue or issues worthy of trial.3 In order to enter summary judgment against a defendant, the Court must be satisfied that the plaintiff’s case is “unanswerable”, a conclusion that will not be available where there is an arguable defence or cross-claim.4
[10] While it is well established that the Court may deal with clear cut legal issues in the context of an application of summary judgment, it is a less appropriate forum for determination where pleadings are necessary to enable the essential elements of a defence to emerge.5
The plaintiffs’ claims
[11] In the 38 proceeding the plaintiffs say that they are entitled to summary judgment against the first defendant trustees as the borrowers under the loan transaction and the second to ninth defendants pursuant to guarantees given by them. They say that it is well established that mortgagees may apply and obtain summary judgment for a mortgagor’s default under a loan agreement.6 The primary basis for this claim is that the final payment under the December 2020 settlement agreement of
$1,016,000 due to be paid by 31 January 2021 remains unpaid.
[12] In the 43 proceeding the plaintiffs say that the third defendant trustees guaranteed the discharge by the first defendant trustees of their obligations and granted a mortgage security over their Wheatley Street property in support of their guarantee.
2 Pemberton v Chappell [1987] 1 NZLR 1, (1986) 1 PRNZ 183.
3 Auckett v Falvey HC Wellington CP296/86, 20 August 1986; MacLean v Stewart (1997) 11 PRNZ 66 (CA).
4 Towers v R & W Hellaby Ltd (HC) Auckland CP185/86, 13 May 1986.
5 See A-G v Rakiura Holdings Ltd (1986) 1 PRNZ 12 and Pemberton v Chappell [1987] 1 NZLR 1, (1986) 1 PRNZ 183.
6 See Koroniadis v Bank of New Zealand [2015] NZCA 337; ASB Bank New Zealand Ltd v Joe
[2016] NZHC 2925.
They say that they have given the necessary notice pursuant to Part 3, Subpart 5 of the Property Law Act 2007. Accordingly, they say that they are entitled to foreclose on the same, and seek an order for vacant possession.
Some further background
[13] Having regard to the competing arguments advanced for the plaintiffs by Mr Fraundorfer and for the defendants by Mr O’Connor and Mr Richards, it may be helpful to clarify the stages of the parties’ dealings.
[14] The first stage was the lending arrangements entered into by the parties (other than the ninth defendants in the 38 proceeding) in May 2018. First Mortgage stepped in to assume the financing role from the original financier in relation to the development then being undertaken — and well advanced — by the first defendant trustees.
[15] The second stage in the relationship came about in September 2019. By then First Mortgage was concerned about the progress of the development. The variation arrangements entered into by the parties at this time involved an increase in the loan
— from $9m to $11m — and additional security including an additional guarantor being the ninth defendant trustees. Other important variations to the arrangements included pushing out milestone dates, extending the term of the loan to accommodate these and linking these loan arrangements with the other loan arrangements referred to by Mr Fraundorfer in his summary.
[16] The third and final stage in the relationship came about in December 2020. By that stage the parties were in dispute, and the settlement arrangements were directed at resolving their dispute. The plaintiffs were contending that the first defendant trustees were in breach of their obligations, most particularly by failing to repay the loan, and that they were entitled to exercise their contractual and security rights against both them and the guarantors. The first defendant trustees did not accept that, and were alleging that it was the plaintiffs who were in breach. Eventually, following correspondence and discussions, a settlement was reached.
[17] The plaintiffs’ pleading as to the terms of the settlement agreement is brief and uncomplicated. They allege it was agreed that:
(a)Thackery Trust and Thorn Trust [another Herbert Family Trust involved in the transaction] would make a partial payment to the First Plaintiff of $11,508,000 (Partial Repayment);
(b)The First Plaintiff would accept the Partial Repayment on the basis that:
(i)it would discharge the Thackery mortgage, the Herbert Pukawa mortgage, the Avenue Trust mortgage, the Charles Street mortgage, and the Thorn Trust mortgage;
(ii)the Herbert Family Trust mortgage would remain in place;
(iii)that the Herbert Family Trust would execute refinancing documentation in relation to 27 Wheatley Road, Napier to allow the Thackery Trust to make a payment of $1,016,000 to the First Plaintiff by 31 January 2021;
(iv)upon receipt of the $1,016,000, by 31 January 2021 the First Plaintiff would register a discharge of the Herbert Family Trust mortgage;
(v)the Guarantees remain in place until all amounts due and owing under the Extension Agreement are repaid in full (Partial Repayment Terms);
(c)the purpose of the Partial Repayment Terms the “Agreed Sum” was
$12,524,000.
[18] The evidence supporting this pleading was provided by First Mortgage’s financial controller, Mr Roger Ford. Mr Ford produced an exchange of emails that took place on 18 December 2020 and which he says recorded the terms of the settlement. The primary parties to this exchange of email were the plaintiffs’ solicitors, the solicitors acting for the first defendant trustees and a Mr Ian Smith who is connected with the first defendant trustees.
[19] Broadly speaking the three emails do support the pleading. The first email is from First Mortgage’s solicitors (Holland Beckett, Tauranga) to the first defendant trustees’ solicitors (Lawson Robinson, Napier). Holland Beckett say that the impediment to finalising the terms of a settlement is reluctance on the part of the third defendant trustees, or more particularly Fiona Herbert, to agree, and indicate — effectively as a way of getting around any difficulty — that First Mortgage would be
prepared to accept a payment of $11,588,000 in order to discharge “all other securities”. They go on to clarify that that sum is calculated by reference to what they refer to as an “agreed sum” of $12,524,000 less an amount calculated to reflect the proportion of that sum payable by the third defendant trustees of $936,000 giving them a total of $11,588,000. Then the letter goes on to confirm other terms as follows:
·Refinance of Wheatley Road is to be completed by the end of January 2021.
·This will be without prejudice to my client’s [sic] rights under the PLAs issued. Should Wheatley Road not be refinanced (by payment of $936,000) by the end of January, then my client should be free to act under the PLAs and exercise power of sale on Wheatley Road.
·Your client shall immediately act in order to remove the injunction as it applies to Wheatley Road so that my client can take the necessary action in February (if required).
[20]Mr Smith replied later the same day saying:
We are down to the wire on getting this to settle today.
I know I am the non-lawyer in the mix … but I take it upon myself to put the following to you as a final final change.
1.The settlement side is (rounded to nearest thousand dollars) $80,000 short
2.Will FMT agree to – deduct $80,000 from the $11,588,000 – allowing settlement of all by Wheatley for $11,508,000
3. And add $80,000 to Wheatley equals it goes up to $1,016,000 Assuming so, please get Anita your settlement statements amended as above.
[21] In their reply, Holland Beckett accept that counterproposal on behalf of the plaintiffs.
[22] On my reading of this correspondence, the parties agreed on a total settlement sum of $12,524,000. A partial payment of $11,508,000 was to be made in reduction of that sum, leaving what was perceived to be the share of the total amount payable by the third defendant trustees. Upon the payment of that $11,508,000 (for which no time was stated), First Mortgage would arrange for the discharge of all securities other than the guarantees and the mortgage security given by the third defendant trustees. The parties anticipated arrangements then being made between the first defendant trustees
and the third defendant trustees so as to enable the first defendant trustees safely to make the payment agreed to be due by the third defendant trustees. That payment was to be made by 31 January 2021. Once that payment was made, First Mortgage would release the second to ninth defendants from their guarantees and discharge the mortgage security over the third defendant trustees’ property.
[23] That the intention of those negotiating these settlement arrangements was that they were to be in full and final settlement of all obligations owed by the parties to each other is plain enough.
[24] None of the correspondence includes such terminology. But that is not important. The question is the mutual intention of the parties. It could scarcely be plainer that by December 2020 these two parties had had quite enough of each other. They had been in dispute for some time and there had been mutual threats and litigation. Plainly they wanted quit of each other, and what they were doing was negotiating terms which would enable them to bring the relationship to an end.
[25] If both parties had complied in all respects with the terms of those arrangements, all issues would have been resolved by 1 February 2021.
[26]Regrettably, that is not what happened.
[27] As Mr Fraundorfer records in his description of events, the plaintiffs received the initial payment of $11.508 m. The mortgage securities expressly identified in the settlement agreement were discharged. However, the first defendant trustees did not make the second payment of $1.016 million by 31 January 2021. First Mortgage says that the first defendant trustees were therefore in breach of the settlement arrangements.
[28] As both Mr O’Connor and Mr Richards contend, the position is not quite as straightforward as that. Aside from the mortgage securities, the plaintiffs apparently held a General Security Agreement over the assets of the first defendant trustees which was not released. The first defendant trustees say that it was the existence of this security that prevented them being able to make arrangements to refinance the third defendant trustees. They say that the plaintiffs were in breach of their obligations
under the settlement agreement for not releasing the GSA, and that they were therefore justified in not making the final payment.
[29] Against that background, I turn to the arguments advanced on behalf of the plaintiffs, the defendants other than the third defendant trustees and the position of the third defendant trustees, particularly Mrs Herbert.
[30]On any view, the term of the loan has expired.
[31] The plaintiffs contend that on that basis alone they are entitled to judgment for the outstanding balance. Cases such as Koroniadis v Bank of New Zealand [2015] NZCA 337 and ASB Bank New Zealand Ltd v Joe [2016] NZHC 2925 indicate that where there are no other matters precluding it, a mortgagee is entitled to summary judgment in respect of a mortgagor’s default under a loan agreement. That is simply the exercise of a mortgagee’s rights.7
[32] In addition to their claim for the balance due as at 31 January 2021, the plaintiffs claim interest and costs under the original May 2018 loan agreement as varied in September 2019. For contextual purposes, the total amount claimed as at 19 May 2021 (the date of the expiry of the plaintiffs’ demand) was $2,796,403.49.
Defences
[33] On behalf of the first defendant trustees (and effectively on behalf of all guarantors) Mr O’Connor submits that those parties have arguable defences available to them.
[34]At the outset of his submissions he summarised these:
Defendants’ case is based on four simple points
·Defendants dispute claim for penalty interest, costs/expenses and nine months of ordinary interest.
·Defendants have a cross-claim for $2,369,60.00.
7 Downsview Nominees Ltd v First City Corporation Ltd [1993] 1 NZLR 513 (PC) at 521.
·Settlement agreement was a full and final settlement. Cannot bring new claim. No notice to cancel. Plaintiffs’ breached settlement agreement. Defendants did not breach.
·Defendants can apply for relief under s 43 of the Contract and Commercial Law Act. Part performance. Setoff.
Interest and costs
[35] Although this was not quite where Mr O’Connor’ started, it appears to me that, having regard to the terms of the parties’ settlement agreement in December 2020, it is arguable that the plaintiffs are limited to claiming the balance of the amount agreed to be payable on 31 January 2021 together with interest pursuant to the Interest on Money Claims Act 2016 and costs pursuant to pt 12 of the High Court Rules 2016.
[36] In other words, as Mr O’Connor contends, it appears to be arguable that, having entered into a full and final settlement, on which they rely in their claim, the plaintiffs have foregone their former contractual entitlements relating to interest and costs. The settlement agreement is silent as far as I can see in relation to interest and costs. Certainly, there was no express reservation by the plaintiffs of their entitlement to contractual interest and costs in the event of breach by the first defendant trustees. I accept of course that there may be an argument that that was a necessary implication. However, for the purposes of this summary judgment application, I am not satisfied that the plaintiffs can demonstrate that the first defendant trustees do not have an argument along these lines. I acknowledge also that the position might be different were there any evidence of the plaintiffs having formally cancelled the settlement agreement, but there is no such evidence.
[37] In the course of his submissions Mr O’Connor advanced more specific arguments concerning the plaintiffs’ entitlement to claim interest and expenses. However, having reached the conclusion I have as to this contention, I do not think it necessary to address those.
The alleged cross-claim
[38] Mr O’Connor submitted that the first defendants have a cross-claim which it was necessary to bring to account in determining whether the plaintiffs are entitled to summary judgment.
[39] In relation to this he referred me to Grant v New Zealand Motor Corporation Limited where the Court of Appeal said that in the context of summary judgment proceedings a defendant is entitled to raise a cross-claim: 8
… that so affects the plaintiff’s claim that it would be unjust to allow the plaintiff to have judgment without bringing the cross-claim to account. The link must be such that the two are in effect interdependent: judgment on one cannot fairly be given without regard to the other; the defendant’s claim calls into question or impeaches the plaintiff’s demand. It is neither necessary, nor decisive, that claim and cross-claim arise out of the same contract.
[40] However, the Court will not entertain speculative cross claims devoid of plausibility.9
[41] Mr O’Connor submitted that the defendants have a cross-claim against the plaintiffs for issuing what he referred to as invalid Property Law Act notices which he contended amounted to repudiatory action on their part.
[42] The essential argument is that in early 2020 the plaintiffs concluded that the first defendant trustees were in breach of their obligations and resolved to call in the loan and if necessary, exercise their rights as security holders. The plaintiffs issued Property Law Act notices against the defendant parties in March 2020. The defendants sought and secured injunctive relief preventing the plaintiffs from foreclosing on the securities.
[43] Essentially for the reasons canvassed by Gwyn J in her judgment in which she granted the defendants injunctive relief, and that I referenced in my judgment of 3 November 2020,10 it does seem to me, as Mr O’Connor submits, that the first defendant trustees and the other affected guarantors have a potential claim that the Property Law Act notices constituted repudiatory acts on the plaintiffs’ parts that may have resulted in losses to the defendants, which may be recoverable.
[44] Mr O’Connor contends that the defendants’ suffered losses exceeding the amount of the plaintiffs’ claim in this proceeding. There is insufficient evidence to go into detail. However, I accept that there is at least an arguable claim, and that it is so
8 Grant v NZMC [1989] 1 NZLR 8 (CA) at 9-10.
9 Petricevic v Bridgecorp Management Services Limited (in rec) [2008] NZCA 286 at [14].
10 First Mortgage Custodians Ltd v Herbert [2020] NZHC 2874, (2020) 25 PRNZ 515 at [46].
inextricably linked to the plaintiffs’ claim that it would be unjust to try one in the absence of the other.
Settlement
[45] There is considerable overlap between he defendants’ first submission and this third submission. As I understood Mr O’Connor’s third argument it was that, having regard to the terms of the settlement arrangements between the parties in December 2020, and the fact that neither the plaintiffs nor any other party sought to cancel the same, the plaintiffs “cannot bring a new claim”. By that I understood Mr O’Connor to be submitting that as a result of the settlement agreement reached between the parties in December 2020, any claim by either party needed to be based on those arrangements and could not, for example, revisit potential claims resolved as part of the settlement. I have already concluded that that contention is arguable.
[46] Mr O’Connor went on to submit that it was the plaintiffs rather than the first defendant trustees that had breached the terms of the settlement agreement.
[47] In regard to this submission he pointed to the provision in the agreement whereby the plaintiffs agreed to discharge all securities other than the guarantees and the mortgage over the third defendant trustees’ property. He referred me to the evidence to the effect that the plaintiffs held a general security agreement (GSA) over the first defendant trustees’ assets which they did not release. Mr O’Connor submitted that this was contrary to the terms of the settlement arrangements.
[48] It was Mr O’Connor’s submission that the existence of this GSA effectively stood in the way of the first defendant trustees being able to make the necessary refinancing arrangements for the third defendant trustees so as to place them in a position to pay the final settlement moneys of $1.016 million. On that basis, Mr O’Connor submitted that “a defaulting party cannot rely on its own breach to obtain judgment.
[49] On the plain words of the correspondence that sets out the terms of the settlement agreement it does appear to me that the plaintiffs were under an obligation to release all securities other than the guarantees and the mortgage security over the
third defendant trustees’ property. Although the parties did not make any reference to the GSA in their arrangements there is at least an arguable case that the plaintiffs bound themselves to the release that security.
[50] No doubt the causative link between the plaintiffs’ failure to release the GSA and the claimed inability of the first defendant trustees to make the necessary arrangements will be difficult to establish.
[51] However, the lack of clarity on this issue is not something that lends itself to a resolution on affidavit evidence.
[52] In the end, my assessment is that there is enough in this contention to conclude that this is another area in which the first defendant trustees (and the guarantors) have a triable defence available to them.
Contract and Commercial Law Act 2017
[53] Mr O’Connor’s final contention is based on s 43 of the Contract and Commercial Law Act, which provides:
43 Power of court to grant relief
(1)When a contract is cancelled by any party, the court may, if it is just and practicable to do so, make an order or orders granting relief under this section.
(2)The relief may be granted in the course of any proceeding or on application made for the purpose.
(3)An order under this section may—
(a)direct a party to pay to any other party the sum that the court thinks just (subject to section 35):
(b)direct a party to do or refrain from doing, in relation to any other party, any act or thing that the court thinks just:
(c)vest the whole or any part of any relevant property in a party:
(d)direct a party to transfer or assign the whole or any part of any relevant property to any other party:
(e)direct a party to deliver the whole or any part of the possession of any relevant property to any other party.
(4)In subsection (3),—
party means a party to the proceeding
relevant property means real or personal property that was the subject of the contract or was the whole or part of the consideration for the contract.
[54] I do not see that s 43 assists the defendants. It applies when a contract is cancelled, and operates to allow the Court to redress any injustices brought about by the cancellation. Here, neither party claims to have cancelled the underlying lending arrangements or the settlement agreement. This is a case of breach by one or either or both parties of the latter.
The 38 proceeding — conclusion
[55] In my judgement, the plaintiffs cannot establish that the defendants have no triable defence, or cross-claim.
[56] In those circumstances, the proper course in this case is to dismiss the plaintiffs’ application for summary judgment.
Fiona Herbert’s position
[57] As already indicated, the defences advanced by Mr O’Connor on behalf of defendants other than Fiona Herbert are also relied on by Ms Herbert.
[58] Mr Richards advances additional defences on her behalf, which, it is contended, preclude the First Mortgagee companies obtaining judgment against the third trustees in either proceeding. The primary arguments are:
(a)that Fiona Herbert’s execution of both the May 2018 and September 2019 documentation is vitiated by duress or undue influence;
(b)that any guarantee given by the third defendant trustees in May 2018 was discharged by material variation of the terms of the loan between First Custodian and the first defendant trustees in September 2019;
(c)that any guarantee given by the third defendant trustees in May 2018 was discharged by the release by the plaintiffs of the first defendant trustees in December 2020.
Some relevant facts
[59] The first and second-named third defendants, Anthony Herbert and Fiona Herbert, were a married couple. They had two sons, Cameron Herbert and Bradley Herbert (to whom it will be convenient to refer by their first names).
[60] At all material times Anthony Herbert, Fiona Herbert and Stephen Lunn were the trustees of the Herbert Family Trust. Stephen Lunn was, at least at one stage, the family solicitor.11
[61] Anthony Herbert and Fiona Herbert’s family home was in Wheatley Road in Napier. The third defendant trustees owned — and still own — the property.
[62] Prior to the May 2018 transactions, Anthony Herbert and Fiona Herbert separated and divorced. Fiona Herbert remained in the former family home. She still lives there.
[63] The documentation executed in May 2018 on which the plaintiffs rely in their claims against the third defendant trustees consisted of a guarantee and mortgage. These were executed by all three trustees. In September 2019, Ms Herbert declined to sign formal variation documentation, but she did sign a letter which she says she did not see until immediately before signing.
[64] Ms Herbert says that on both occasions she was subjected to such severe emotional pressure by her former husband and her sons to execute the documentation that she felt that she had no choice but to do so.
11 Stephen Lunn is also a first defendant as trustee of the Thackeray Trust, alongside Anthony Herbert.
[65] The onus is on a party alleging duress or undue influence to satisfy the Court that the alleged duress or undue influence had the effect of undermining his or her free will. Mr Richards submits that there is compelling evidence that Ms Herbert’s husband and sons put her under severe pressure. Mr Herbert was involved in the family business, and Cameron and Bradley appear also to have been closely connected with the lending arrangements.
[66] Ms Herbert’s unchallenged evidence is that on both occasions she came under severe pressure from her former husband and her two sons to execute the documentation. The affidavit evidence includes text messages to her from Cameron and Bradley, the thrust of these being that if she were to refuse to execute the guarantee documentation it would bring ruination upon the family. Some of the texts are expressed in vile and abusive terms.
[67] I have no hesitation in concluding that a barrage of abusive texts addressed to a parent by adult children in circumstances such as this is capable — I put it no higher than that — of influencing the parent to a point that he or she may no longer feel that they have any choice but to do what is being asked of them in order to save the family’s financial position and avoid a schism in the family. This seems to me to fall within the Court of Appeal’s description in ASB Bank Ltd v Harlick, which was:12
The relationship must involve such degree of reliance and trust as suggests a real risk that a disadvantageous transaction has not resulted from the kind of informed and independent decision to be expected from a person in the position of the party seeking relief but rather from the influence the other party to which the relationship has in that position.
[68] Prima facie then, my view is that there is an arguable case that the relevant documentation was signed by Ms Herbert in her capacity as a trustee of the family trust as a result of duress or undue influence. The doctrine of duress or undue influence is directed towards vitiating a victim’s consent to a transaction.13 In these circumstances, it is arguable that it would be available to Ms Herbert.
[69] I have not overlooked the fact that in both May 2018 and September 2019 Mrs Herbert had the opportunity to take independent advice. However, it is difficult
12 ASB Bank Ltd v Harlick [1996] 1 NZLR 655 (CA) at 659.
13 UDC Finance LTD v Down [2009] NZCA 192.
to see how she could have done so effectively, having been the subject of abusive behaviour on the part of her two adult sons, and when the letter she signed in September 2019 was prepared by the solicitors for the lender immediately prior to it being put to her to sign, she apparently having refused to sign the formal documentation, and those same solicitors having, earlier in the day, accepted that she was in no state to do so.
[70] If a finding of duress or undue influence were to be reached in relation to one of the three trustees of the Herbert Family Trust that would undermine the validity of the documentation altogether; it is elementary that in the absence of a provision to the contrary in the trust deed, trustees must act unanimously.
[71] The difficulty in this case is that in order to vitiate the transaction between the plaintiffs and the third defendant trustees, that pressure must by definition be applied by, or imputed to, First Mortgage.
[72] The law as to when duress or undue influence may be imputed to a party has been in a state of flux for some time.
[73] As Mr Richards submitted, the general principle is clear enough. The law will only impute pressure to a party who or that is not directly responsible for exerting the same where that party was on enquiry as to the possibility of such pressure being exerted and did not take reasonable steps to ensure that it was not being exerted.14
[74] The primary issue is exactly when a party will be regarded as having been on enquiry. As to this, the leading New Zealand authority is Wilkinson v ASB Bank Ltd.15 In that case, the Court of Appeal said that a party will be regarded as having been on enquiry if and when it had sufficient knowledge of facts to give rise to a presumption of undue influence. That test tended to set the bar relatively high. Three years after Wilkinson v ASB was decided, the House of Lords in Royal Bank of Scotland plc v Etridge16 formulated a different test which is generally regarded as having lowered the bar somewhat. The House of Lords said that the party in question will be put on
14 Royal Bank of Scotland plc v Etridge (No 2) [2002] 2 AC 773; [2001] 4 All ER 449 (HL) at 802; 464.
15 Wilkinson v ASB Bank Ltd [1998] 1 NZLR 674 (CA).
16 Royal Bank of Scotland plc v Etridge (No. 2) [2001] UKHL 44, [2002] 2 AC773.
enquiry whenever the relationship between the principal and the guarantor is “non- commercial”.17 In New Zealand, the Court of Appeal has said that “the paradigm case in which a creditor is “on inquiry” is where a wife is to guarantee advances made to her husband” 18, although “[a] wife is no longer automatically regarded as being under a special disability vis-à-vis her husband.19
[75] In the present case, Mrs Herbert was not guaranteeing only her former husband’s debts, but in effect the entire family’s debts.
[76] The authorities already referred to also diverge as to the test as to what steps a party on enquiry must take to insulate itself from the imputation. In Wilkinson v ASB Bank Ltd the Court of Appeal concluded that the party in question need only insist that the guarantor be given advice by an independent solicitor and obtain certification that this has occurred.20 The Court was loathe to impose a duty on a financier to “tell a solicitor how to perform his or her duties or, in other than exceptional cases, to inquire about the independence of the solicitor or the adequacy of the advice”.21
[77] The House of Lords in Royal Bank of Scotland plc v Etridge indicated that the bank there would have needed to ascertain the name of the solicitor that the guarantor party wished to act for him, her or it, provide that solicitor with adequate information as to the nature of the transaction to make a judgment about it and obtain written confirmation from that solicitor that appropriate advise had been provided.
[78] In the twenty years since the Royal Bank of Scotland plc v Etridge, the New Zealand Courts have not had an opportunity, or at least have chosen not to avail themselves of any opportunity, to review the position and determine whether or not Wilkinson v ASB Bank Ltd remains good law in this country or whether the New Zealand courts will follow the approach adopted by the House of Lords in Royal Bank of Scotland plc v Etridge.
17 At [87].
18 Hogan v Commercial Factors Ltd [2006] 3 NZLR 618.
19 Wilkinson at [26].
20 At [27].
21 At [28].
[79] That brings me to the questions of whether it is arguable that the plaintiffs were put on inquiry in this case, and if so whether it is arguable that they took sufficient steps, or, in other words, whether any undue influence in this case can be imputed to them so as to undermine any guarantee given by the trustees of the Herbert Family Trust.
[80] Mr Richards submits that irrespective of whether the Court adopts the approach articulated in Wilkinson v ASB Bank Ltd or that adopted in Royal Bank of Scotland v Etridge, it is arguable that First Mortgage were put on inquiry. The submission is that circumstances were such that First Mortgage had knowledge of facts should have led them to conclude that there was a presumption of undue influence (not just that the arrangement between the first defendant trustee borrowers and the third defendant trustees was “non-commercial”).
[81] The facts to which Mr Richards points are set out in his submissions in the following terms:
Whether the Court adopts Wilkinson or Eteridge it is submitted that FMT was sufficiently put on inquiry that the guarantee was ‘uncommercial’ or undue influence was possible because of the nature of the transaction and the form and nature of Ms Herbert’s connection with the borrowers:
a)The borrowing was substantial (in excess of $9 million). Ms Herbert had no other involvement in the borrowing transaction other than the familial link. She is not otherwise involved with the borrowers.
b)Ms Herbert was formerly married to one of the trustee borrowers (Anthony Herbert) and so there was the strong potential for an emotional tie or economic or emotional dependency on the part of Ms Herbert.
c)Ms Herbert was not guaranteeing lending to a family business to her and her family or economic unit’s benefit. There was no involvement or control in the business enterprise (the Thackeray Trust) that she was providing an unlimited guarantee for a significant level of borrowing and she obtained no financial benefit from their development activities.
d)A mortgage was provided over residential property: Wheatley Road. This was her family home. FMT were aware that Wheatley Road was held by the trustees of a family trust.
Ms Bush’s evidence supports the view that Ms Herbert’s provision of a guarantee was a matter that called for explanation:
a)Ms Bush describes the transaction as being with “a number of Thackeray Trust’s associated entities (trusts, individuals and corporates) all providing security by way of registered mortgages and guarantees.” Ms Bush gives no evidence as to how these persons and entities are “associated” and what FMT did to understand the associations.
b)Ms Bush evidence outlines her impression of why Ms Herbert signed the documentation in May 2018. It is not at all clear how Ms Bush formed this impression as she never had contact with Ms Herbert and Ms Herbert also never had contact with the Thackeray Trustees’ mortgage broker.
c)Irrespective of that, Ms Bush’s evidence is she considered Ms Herbert was signing the documentation for “the good of the family”. She and FMT considered it was a “family project, with various family members involved.” FMT’s submissions at [8.4] even say the development “was a family affair”. But Ms Bush says she recalls being aware that Ms Herbert was separated from her husband.
(Footnotes omitted)
[82] On Mrs Herbert’s behalf, it is contended that as a result of these considerations it is at least arguable that First Mortgage knew that she was providing an unlimited guarantee to secure significant borrowing and viewed this as unexceptional because of an (unjustified) assumption of family unity. The family ties (and the lack of commercial ties, control or benefit on the part of Mrs Herbert) have made such a guarantee a transaction that should put a lender on inquiry to understand why Mrs Herbert was willing to provide an unlimited guarantee which exposed her to significant liability for “for the good of the family”. I agree. It seems plain to me that that is an issue that must go to trial.
[83] Mr Richards went on to contend that on the basis that the First Mortgage company were put on inquiry, they did not take adequate steps to insulate Ms Herbert from undue influence.
[84]In doing so, he marshalled the argument in the following terms:
33.FMT made no direct enquiries into Ms Herbert’s situation with Ms Herbert or anyone who could speak unbiasedly on Ms Herbert’s behalf.
34.Ms Herbert says she had no contact with Ms Bush or anyone at FMT. Ms Bush’s understanding of Ms Herbert’s state of mind came from engagement with Thackeray Trust’s mortgage broker who also had no contact with Ms Herbert. Ms Bush does not depose as to on what
basis she considered the Thackeray Trust’s mortgage broker could reliably speak for Ms Herbert.
35.FMT has adopted an arms-length approach of sending a letter of instruction to Lunn & Associates. Despite knowing it to be a “family affair” FMT appears to have made no enquiries of why family members and/or Ms Herbert with nothing to gain from the Thackeray Trust’s development activities would provide significant security over borrowing of $9 million.
36.FMT did not provide the type of information on their assessment of the borrowing to Ms Herbert’s independent advisor that the authorities expect it to provide. While it is accepted direct contact with the proposed guarantor has not invariably been required by the courts, the steps that a lender needs to take to insulate itself will depend on what it knows of the transaction and the proposed guarantor’s role in it. Based on Ms Bush’s evidence there was not enough done by FMT to satisfy themselves of Ms Herbert’s understanding and free acceptance of the May 2018 obligations.
[85] Mr Fraundorfer did not address directly the contention that Ms Herbert signed the guarantee and mortgage documentation as a result of undue influence. His contention was that:
…even if Ms Herbert was unduly pressured, responsibility can’t be placed on FMT’s shoulders because (a) they were not on notice and (b) they took reasonable steps to be satisfied Ms Herbert understood the guarantee … for both the initial lending and the variation.
[86]Expanding on that submission Mr Fraundorfer continued:
8.4Firstly, FMT was not on notice of any actual presumed undue influence. Even if Ms Herbert was subject to undue influence in 2018 during the initial lending, she affirmed the Trust Guarantee in 2019 when it was varied. In September 2019, she signed a “Consent Letter” prepared by negotiation with her lawyer and FMT. In that letter, Ms Herbert (as trustee) implicitly agreed to increase the principal sum and that the variation was without prejudice to the Trust Guarantee which is a continuing one. Despite litigation since June 2020, Ms Herbert only raises these defences now. Inferences should be drawn. The transaction made commercial sense. The Herbert Family Trust owned the Property she lived in. By refinancing the ASB loan, Ms Herbert could continue to live in the Property. This was of personal benefit to her. The development itself was a family affair, and FMT understood Ms Herbert’s willingness to be involved was “for the good of the family”.
8.5Second, FMT required (and obtained) solicitors’ certificates in both 2018 and 2019 which confirmed that she was told to get independent advice, and that a solicitor had explained the guarantee documents to her. This is standard practice for lenders. The adequacy of advice Ms Herbert received is not FMT’s responsibility, and it is well established that lenders should not be expected to have direct dealings
with guarantors. Additionally, Ms Herbert signed the “Trust Certificate” page of the variation agreement, binding the Herbert Family Trust. At all material times, FMT was satisfied that Ms Herbert understood the nature of the guarantee.
[87] Having concluded that it is reasonably arguable that First Mortgage was on inquiry as to the possibility of undue influence, it appears to me that the issue of whether they took sufficient steps to discharge the obligations that arise from that is also a very fact-dependant one, irrespective of which test is applied. In my assessment this is an issue best resolved at trial.
[88] In the end, the conclusion I have reached is that Ms Herbert has a tenable defence based on duress or undue influence.
The additional defences
[89] Having regard to the conclusions I have reached relating to the defence of duress or undue influence, it is not necessary to spend as much time as might otherwise be justified in relation to the additional defences raised on her behalf.
[90] Nevertheless, against the possibility that I am wrong in the conclusions I have reached, it is appropriate to address these.
Discharge by material variation
[91] Mr Richards contends that even if the third defendant trustees were bound by the May 2018 guarantee and mortgage, any obligations were discharged in September 2019 by the variation of the lending arrangements.
[92] The principal aspect of the September 2019 variation arrangements upon which Mr Richards relies is cl 11 which provided as follows:
Any act in default in this loan will also be deemed to be an act in default in relation to loan no. 37141 (Thorn Place Trust) and vice versa. If either Loan is deemed to be in default, then both facilities will be considered to be in default.
[93] Mr Richards submits that this clause constituted a “material variation to the loan agreement from May 2018 which is prejudicial to Ms Herbert”. Certainly it broadened the circumstances in which any guarantee could be called upon.
[94] In response Mr Fraundorfer submits that by signing the 25 September 2019 letter Mrs Herbert agreed to the September 2019 variation to the loan arrangements and therefore that the third defendant trustees cannot avoid liability by reason of the change.
[95] The difficulty with this contention is that on one construction of the letter it does not involve Mrs Herbert consenting to the variation in question. The letter signals her agreement to the “loan variation”. Mr Richards submits, the term loan variation as defined in the letter itself involves the increase in the principal amount lent and the change to the expiry date. There is no reference to the default condition.
[96] Mr Fraundorfer also points to cl 2.4(xii) of the May 2018 guarantee which provides that no subsequent variation to the terms of the sale will be treated as discharging the guarantor.
[97] It is settled law that clauses such as cl 2.4(xii) only operate in relation to subsequent changes within the purview of the original documentation.
[98] It does not appear to be controversial that the September 2019 variation was a ‘material variation’. The principle as applied in New Zealand is that a party benefitting from a guarantee cannot keep a surety bound without consulting them as to a material alteration in the agreement.22 The purview doctrine “holds that an indulgence clause is confined to acts of indulgence within the general purview of a guarantee, unless such acts are contemplated by the principal contract which is the subject of the guarantee”.23 Where such variations fall outside the general purview of a guarantee, the surety will be discharged.24 This principle is referred to in the English authorities as the rule from Holme v Brunskill.
[99] It is not clear on the evidence that Ms Herbert was actually aware that her signing of the letter related to the ‘loan variation’ would have the effect of substantially
22 Canican v Carters [2021] NZCA 397 at [17]; citing Dunlop New Zealand Ltd v Dumbleton [1968] NZLR 1092.
23 Richina Pacific Ltd v Samson Corporation Ltd [2018] NZCA 132 at [41]; citing Trade Indemnity Company Ltd v Workington Harbour and Dock Board [1937] AC 1 (PC) at 21; and CIMC Raffles Offshore Singapore Ltd v Schahin Holding SA [2013] EWCA Civ 644, [2013] 2 All ER (Comm) 760 at [34]–[36].
24 Canican v Carters [2021] NZCA 397 at [16].
expanding the nature of her guarantee. Nor does it seem likely that the clause itself can be considered as falling within the purview of the principal loan agreement. My preliminary view is that a substantial expansion of the nature of a guarantee in circumstances where the guarantor’s consent to the variation is arguably compromised falls outside the purview of the original guarantee. In this regard, I note the observations of the UK Court of Appeal in CIMC Raffles (Singapore Ltd & Anor v Schahin Holdings SA [2013] EWCA Civ 644 that such issues are better resolved in the context of trial, rather than summary judgment proceedings.25
[100] In short I am satisfied that Mrs Herbert has available to her an arguable defence to the effect that any residual obligations the third party trustees had arising out of the May 2018 loan documentation were discharged by the September 2019 variation because Mrs Herbert did not execute any documentation expressly agreeing to the cl 11 of the variation.
The December 2020 settlement agreement
[101] The next argument advanced on Mrs Herbert’s behalf by Mr Richards concerns the December 2020 settlement arrangements.
[102]There are two limbs to the argument:
(a)Mr Richards submits first, that “if, as the other defendants argue, the primary debtors have been discharged from liability by the December 2020 settlement agreement then the guarantors have been discharged by operation of law”;
(b)Second, he submits that “following payment under this settlement agreement FMT applied $9.534 m to the loan account of the Thackery Trustees. The balance of this loan account was at that point reduced to
$1.823 million. The principal sum advanced in May 2018 has been repaid … [t]he sum remaining due under the loan to the Thackeray Trust in the additional principal advanced by FMT in September 2019. If the Court considers [Mrs] Herbert has an arguable defence that she
25 At [65].
is not bound by the 2019 variation then the Court should not order summary judgment against [Mrs] Herbert on the Debt Claim or Possession Claim as FMT has not established that [Mrs] Herbert has failed to pay any sum that is payable by her.”
[103]I do not see that these contentions advance matters greatly.
[104] They appear to do little more than restate arguments already advanced on a rather different basis.
Quantum
[105] Finally, Mr Richards contends that in any event the plaintiffs have not established the quantum of their claim. The argument is that even if First Mortgage can claim interest and costs under the contract they can only do so from the date of any breach. He submits that on the face of the claim the plaintiffs have claimed interest and costs for earlier periods. The submission is effectively that if First Mortgage has not calculated their claims correctly, then they are not entitled to summary judgment.
[106] I do not see that at all — assuming first that First Mortgage is entitled to recover contractual interest and costs, and that they have overcalculated these as Mr Richards submits, that would not preclude the Court form entering judgment for the correct amount.
Conclusion
[107] In my judgment, the plaintiffs have not discharged the burden of demonstrating that the First Defendant trustees as borrowers and the second to ninth defendants as guarantors have no defence to the claims against them in either the 38 or 43 proceeding.
[108] Accordingly, the applications for summary judgment in both proceedings are dismissed.
[109] As I have not heard from counsel as to costs, these are reserved. I expect counsel will be able to resolve costs. If not, they may come back by memorandum in the usual way.
[110] Rule 12.12 of the High Court Rules requires me to give directions as to the future conduct of proceedings as may be appropriate. I direct that the proceedings be referred to the registrar for the scheduling of the next available trial date, and also direct that the issue of costs be reserved until the resolution at trial.
Associate Judge Johnston
Solicitors:
Holland Beckett, Tauranga for plaintiffs in both proceedings
Lawson Robinson, Napier for defendants in all proceedings other than for F Herbert Fitzherbert Rowe, Palmerston North for F Herbert
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