Fletcher and Fletcher (as Trustees of the P L & M E Fletcher Family Trust) v Hull HC Whangarei CIV 2009-488-762
[2010] NZHC 501
•20 April 2010
IN THE HIGH COURT OF NEW ZEALAND
WHANGAREI REGISTRY
CIV-2009-488-000762
BETWEEN P L FLETCHER AND M E FLETCHER
(AS TRUSTEES OF THE P L & M E FLETCHER FAMILY TRUST) Plaintiffs
AND P A HULL AND B A HULL First Defendants
ANDFALLS ROAD PROPERTIES LTD Second Defendant
Hearing: 20 April 2010
Appearances: P Magee for Plaintiffs
DJG Cox for First and Second Defendants
Judgment: 20 April 2010
ORAL JUDGMENT OF ASSOCIATE JUDGE BELL
Solicitors:
Thomson Wilson, PO Box 1042, Whangarei
Rennie Cox, PO Box 6647, Auckland
P L FLETCHER AND M E FLETCHER (AS TRUSTEES OF THE P L & M E FLETCHER FAMILY TRUST)
V P A HULL AND B A HULL AND ANOR HC WHA CIV-2009-488-000762 20 April 2010
[1] This matter has come before me this morning as an application by the plaintiffs for summary judgment against the first defendants only. The plaintiffs have discontinued their proceeding against Falls Road Properties Ltd, the second defendant. There is also an application for summary judgment by Falls Road Properties Ltd against the plaintiffs but in light of the discontinuance, that application is no longer alive bar the question of costs.
[2] The proceedings arise out of an agreement for sale and purchase of property
in Massey Road, Waipu. The agreement for sale and purchase provided for the defendants to pay a price of $5 million plus GST. They paid a deposit of $500,000 and they also paid GST of $625,000 soon after the contract was entered into. In the event, the purchasers have paid a total of $1,125,000 under the contract. However, they did not settle on the settlement date. The plaintiffs issued a settlement notice and after the issue of the settlement notice and its expiry without being met, the vendors cancelled the contract.
[3] The plaintiffs initially issued summary judgment proceedings seeking judgment on both liability and quantum. However, over the course of the proceeding they have modified their stance. They say that they are seeking judgment on liability only, recognising that quantum of loss was still at large and cannot be determined in this case on a summary judgment application because issues of fact arise which will require examination by a full hearing.
[4] For their part, the first defendants say that they have already paid $1.125 million, $500,000 as deposit and the rest to be treated as part-payment of any liability to the plaintiffs, and they say that that payment constitutes an over-payment and any losses sustained by the plaintiffs have already been met and they signal that if the proceeding continues they will wish to mount a counterclaim to cover any amount which they say is in over-payment.
[5] When I discussed the matter with counsel this morning, I agreed with them
on directions for the continuation of this case and I now give those directions:
a) Within 10 working days the plaintiffs are to file and serve any amended statement of claim;
b)Within 10 working days the first defendants are to file any counterclaim they wish to issue;
c) The first defendants have 20 working days in which to file a statement
of defence to the plaintiffs’ amended statement of claim;
d)The plaintiffs have 10 working days to file any defence to any counterclaim that may be lodged;
e) Discovery is to be made within 10 working days of the defendants filing their statement of defence; and
f) Inspection is to take place within a further 10 working days.
[6] The parties anticipate that the case will require three days for hearing. Because the defendants intend to issue a counterclaim, liability under the counterclaim will be an issue. As there are liability issues at stake, it is not just a case where damages are to be measured and accordingly it is not within the jurisdiction of an Associate Judge. The matter will have to go to hearing before a justice.
[7] It seems to me that it would be appropriate for the matter to be called again to review compliance with the timetable and directions, to give directions for setting down, and also any matters of resolution outside of a defended hearing. The conference date is 19 July 2010 at 12:00 noon.
[8] Next is the plaintiffs’ summary judgment application. In terms of that application, I make findings which are common ground between the parties and that is that the first defendants failed to settle on the settlement date agreed in the agreement for sale and purchase and that, following the issue of a settlement notice and its expiry, that the plaintiffs were entitled to cancel the contract and did effectively cancel the contract. That still leaves open the issue which the first
defendants wish to raise, namely that they have a counterclaim to recover any excess payment in respect of $1.25 million they have already paid. But I regard the issues
as to whether there should be an entry of judgment on liability as being very sterile
so long as the substance of what is in issue is recognised.
[9] Accordingly, I do not propose to make any order for costs on the plaintiffs’
summary judgment application. I reserve costs. Although the matter is not exactly
on all fours, I regard the position as analogous to the decision of the Court of Appeal
in NZI v Philpott [1990] 2 NZLR 403, that is, a plaintiff’s summary judgment application that was unsuccessful. The Court held there that the plaintiff had not been irresponsible in taking summary judgment proceedings and the outcome on costs was to await the final determination of a hearing of the merits.
[10] That leaves the question of the second defendant’s costs on the plaintiffs’ discontinuance of the claim against the second defendant. In this situation, the plaintiffs were faced with purchasers who also had a nominee and had nominated the second defendant as the person to take a transfer of title. In that situation, a plaintiff normally, out of prudence, will join both purchasers and the nominee to see that all proper people are before the Court at the outset. That is simply a matter of prudence at the outset of the proceeding to make sure that the plaintiff has all the bases covered. In such cases, once a plaintiff recognises that it is no longer necessary to have a defendant in a proceeding, the removal of that defendant should be allowed to go ahead smoothly. It is not in the interests of any parties to clog the process with costs arguments. In this case, the first defendant’s solicitors made it clear that they would not take the point that the second defendant was in fact a purchaser or a party to the contract and therefore the proceeding should be discontinued against the second defendant.
[11] Correspondingly, the plaintiffs’ lawyers recognised the position as one where the plaintiffs should discontinue against the second defendant. They first of all indicated that they would not continue with the summary judgment application and then later they put a proposal which incorporated the fact that they would discontinue against the second defendant altogether. That proposal was not accepted in full but the outcome today has been very much aligned to that proposal.
[12] Once the second defendant knew that the plaintiffs recognised that they could
no longer proceed against the second defendant, it had achieved the result it sought.
It was not necessary for the second defendant to go further and file a summary judgment against the second defendant.
[13] In the circumstances, the appropriate way of dealing with it is to give the second defendant costs against the plaintiffs only for the filing of the notice of opposition but in all other respects not to make any order for costs against the plaintiffs in respect of the second defendant.
R M Bell
Associate Judge
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