FORD BENJAMIN MOEKE AND VANESSA EPARAIMA, CONSTANCE HUI, JOHN SPENCER and JOHNATHAN MICHAEL STOKES s JENNY SHATTOCK, JEFF GASH, MARIN GLUCINA, BILL MACHEN, ARAMA NGAPO-LIPSCOMB, PETER SCHULTE, HERMAN VAN ROOIJEN...
[2024] NZHC 3119
•29 October 2024
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2023-463-30 [2024] NZHC 3119
UNDER the Contract and Commercial Law Act 2017, the Property Law Act 2007, the Interest on Money Claims Act 2016 and the Land Transfer Act 2017 IN THE MATTER OF
breach of contract for the sale of land
BETWEEN
FORD BENJAMIN MOEKE
Plaintiff
AND
VANESSA EPARAIMA,
CONSTANCE HUI, JOHN SPENCER and JOHNATHAN MICHAEL STOKES
First Defendants
JENNY SHATTOCK, JEFF GASH, MARIN GLUCINA, BILL MACHEN, ARAMA NGAPO-LIPSCOMB, PETER SCHULTE, HERMAN VAN ROOIJEN and
ADRIENNE BELL
Second Defendants
BENJAMIN ERIC SMIT
Third Defendant
Hamish DOUCH Fourth Defendant
MIKE BRACKEN
Fifth Defendant
Hearing: 11 September 2024 at 2:15pm Appearances:
Gary Judd KC for the Plaintiff
Paul H Fisher for Mr Glucina and Mr van Rooijen James Gurnick for Mr Machen
Judgment:
29 October 2024
MOEKE v EPARAIMA [2024] NZHC 3119 [29 October 2024]
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Application for leave to appeal to the Court of Appeal]
This judgment was delivered by me on 29 October 2024 at 2:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
INDEX
Paragraph
Introduction [1]
Legal principles [5]
Mr Moeke’s submissions [8]
Interpretation of the “date for hearing the application” [11]
State of mind of the plaintiff/applicant [14]
Argument that the defendants are not joint tortfeasors [17]
Is the Said v B utt defence available? [20]
Estoppel [21]
Costs and delay if an appeal is justified [23] Submissions of the fourth-named second defendant (Mr Machen) [25] Submissions of the third-named and seventh-named Second Defendants [26] Result [29]
Orders [31]
Introduction
[1] On 4 July 2024 the court delivered a judgment (the Judgment) which granted leave to the third, fourth and seventh-named second defendants to file notices of opposition to the plaintiff’s summary judgment application.1 The third, fourth and seventh-named second defendants are defendants in their capacity as councillors on the South Waikato District Council (SWDC).
[2] The plaintiff, Ford Moeke (Mr Moeke), filed an application dated 21 July 2024 for leave to appeal the Judgment.
[3] The third, fourth and seventh-named second defendants filed notices of opposition to Mr Moeke’s application for leave to appeal, dated 5 August 2024.
[4]Mr Moeke’s application was heard on 9 September 2024.
Legal Principles
[5] No appeal2 lies from any order or decision of the High Court made on an interlocutory application in respect of any civil proceeding unless leave to appeal to the Court of Appeal is given by the High Court or by the Court of Appeal following the High Court’s refusal of leave.3
[6] The relevant principles are set out in the decision of the Court of Appeal in Greendrake v District Court where the Court of Appeal identified the following considerations:4
(a)a high threshold exists;
(b)the applicant must identify an arguable error of law or fact;
1 Moeke v Eparaima [2024] NZHC 1767.
2 Except for those appeals provided for under s 56(4) of the Senior Courts Act (the Act).
3 Section 56 of the Act.
4 Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].
(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;
(d)the circumstances must warrant incurring further delay; and
(e)the ultimate question is whether the interests of justice are served by granting leave.
[7] The Court of Appeal in that decision also approved the observations of Fitzgerald J in Finemore Upholstery Ltd v Vaughan to the effect that the requirement for leave was a filtering mechanism to ensure that unmeritorious appeals of no great significance do not unnecessarily delay the proceedings in which the orders had been made.5
Mr Moeke’s submissions
[8] Mr Judd KC, for Mr Moeke, filed a memorandum in support of the application for leave dated 21 July 2024 and filed his submissions in support of the application dated 28 August 2024. He refers to the statement of the Court of Appeal in Moir v IHC New Zealand Inc as setting out the appropriate test for when leave to appeal ought to be granted:6
By analogy with decisions under s 67 of the Judicature Act 1908, the forerunner to s 56, we consider leave should not be granted unless the proposed appeal raises some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the appeal. Moreover leave should not be granted unless the proposed appeal has some reasonable prospect of success. That requires consideration of the merits of the proposed appeal.
5 Greendrake v District Court of New Zealand, above n 4, referring Finemore Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].
6 Moir v IHC New Zealand Inc [2018] NZCA 130 at [6].
[9] Mr Judd submits that Mr Moeke’s grounds for the application for leave to appeal are based on this test. He sets out what he submits are the questions of law arising from the judgment as follows:
(a)what is the correct interpretation, for the purposes of r 12.9(3) of the High Court Rules 2016, of “the date of hearing of the application” in r 12.9(1)?
(b)what “state of mind” is required of a person alleged to be guilty of fraud? Specifically, if a person knows that an act he or she is committing or authorised another to commit will harm or defeat the legal interests of the plaintiff, is that sufficient for that person be found to be a party to a fraudulent (or tortious) conspiracy?
(c)a person who authorises another to enter into a contract which he or she knows will harm or defeat the interests of another be a joint tortfeasor with the person who enters into the contract?
(d)is it arguable that the Said v Butt principles are applicable to absolve SWDC Council members from liability for authorising SWDC to enter into the contract to purchase the property from Raukawa Iwi Developments Limited (RIDL)?7
(e)are Council members estopped from denying liability by reason of being privy to SWDC in respect of Associate Judge Sargisson’s decision (the Liability Judgment)?8
[10] Mr Judd then examines each of these questions, submitting that they are questions of law capable of bona fide and serious argument.
7 Said v Butt [1920] 3 KB 497.
8 Moeke v Raukawa Iwi Developments Ltd [2019] NZHC 3166.
Interpretation of “the date for hearing the application”
[11] Mr Judd notes that r 12.9(1) of the High Court Rules provides that “a party who intends to oppose an application for judgment under r 12.2 or 12.3 must, at least three working days before the date of the hearing of the application, file in Court and serve on the applicant [notice of opposition and affidavit]”. He submits that the analysis of the rule demonstrates that “a date for hearing the application” is the date entered on the application, as served, and if that is the meaning in r 12.9(1) it must also be the meaning in r 12.9(3).
[12] He submits r 12.7 provides that the application for summary judgment and related documents “must be served on the other party to the proceeding not less than 25 working days from the date for hearing of the application”. He submits r 12.8 provides for a postponement of the hearing if the documents have not been served and for a new “date of hearing” to be inserted in the interlocutory application. Mr Judd submits that if “date for hearing the application” refers to the substantive hearing, these rules would be unworkable and the plain intent is that notice of opposition and affidavit must be filed three working days before the date specified in the interlocutory application.
[13] Mr Judd submits that as the interpretation of r 12.9(3) is potentially applicable to every summary judgment application, the matter of interpretation is a matter of public interest.
State of mind of the plaintiff/applicant
[14] Mr Judd submits that the finding in the Judgment that “no evidence has been adduced thus far by Mr Moeke of the state of mind of the applicant in relation to SWDC entering into the Second Agreement, this evidence needs to be elucidated at trial ”9 shows a misunderstanding of what was required to be proved when fraud is alleged and real purpose must be disentangled from motive.
9 Moeke v Eparaima above n 1, at [42(a)].
[15] Mr Judd submits that while the motive of SWDC and its councillors, chief executive and lawyer may have been to protect the community from the perceived risk to the community of Mr Moeke becoming the owner of the property, the real purpose was to deprive Mr Moeke of his legitimate entitlement. That “real purpose” makes the conduct fraudulent, as Associate Judge Sargisson correctly found in respect of SWDC itself when rejecting SWDC’s arguments based on the alleged public interest of protecting the community.
[16] Mr Judd refers to Swan v Secureland Mortgage Investment Nominees Ltd,10 which he submits demonstrates the distinction between motive and purpose. He submits the crucial facts in Mr Moeke’s case are that the defendants knew that there was an existing agreement between RIDL and Mr Moeke, and the defendants knew they were causing SWDC to enter into an agreement to buy the property from RIDL (the Second Agreement) to defeat Mr Moeke’s interest. He submits defeating Mr Moeke’s interest was the real purpose for SWDC’s decision to purchase the property from RIDL, although the motive may have been to protect the community. He submits that as the defendants knew those two things, and they caused SWDC to enter into the Second Agreement with RIDL to purchase the property they are parties to the tortious conspiracy and the “state of mind” of the defendants does not need to go beyond having the knowledge that they do not dispute they had. He submits there is nothing Mr Moeke needs to prove beyond what he has already proved which the defendants have not disputed.
Argument that the defendants are not joint tortfeasors
[17] Mr Judd notes that the Court gave two reasons for being open to the argument the defendants were not joint tortfeasors:
(a)the councillors do not have any financial interest in the transactions of SWDC whereas directors/shareholders do have an interest in the company’s business; and
10 Swan v Secureland Mortgage Investment Nominees Ltd [1992] 2 NZLR 144 (CA).
(b)arguably the applicants must be guilty of tortious conduct themselves, and as the states of mind of the applicants at the time SWDC entered into the Second Agreement has not been the subject of evidence, it is arguable whether or not they are guilty of tortious conspiracy in their individual capacities.
[18] As to the first reason, Mr Judd submits that there is no authority to suggest the directors must have a financial interest in the transaction for the joint tortfeasor principle to apply to them. He submits the reasoning for making company directors liable is that they are making decisions for the company and they are there by causing the company to act, and that is what makes them a party to the tort. He submits this reasoning applies equally to councillors who cause the Council to enter into a contract to deprive someone else of a legal interest.
[19] As to the second reason, Mr Judd submits that the councillors are clearly guilty of tortious conduct themselves, for the same reasons as set out at [16] of this judgment.
Is the Said v Butt defence available?
[20] Mr Judd submits that the Said v Butt defence is not arguable.11 He submits the Said v Butt principle is inapplicable to the present situation as Mr Moeke is not suing SWDC’s councillors because SWDC repudiated or breached a contract, but is suing them because they caused SWDC to enter into the contract which was the means of depriving Mr Moeke of his interest in the property. He submits the Said v Butt principle is not applicable to the SWDC’s councillors’ position.
Estoppel
[21] Mr Judd submits that the SWDC councillors are liable because they are joint tortfeasors. He submits they are joint tortfeasors because of the facts they have not disputed, namely, that they knew of the existing agreement between Mr Moeke and RIDL, and with that knowledge they caused SWDC to enter into the
11 Said v Butt, above n 7.
Second Agreement to defeat Mr Moeke’s interest. He submits these facts not being in dispute, Mr Moeke does not need to rely on estoppel.
[22] Mr Judd submits that nevertheless it remains the case that SWDC’s members and SWDC are privies so that the Council members are estopped from disputing Associate Judge Sargisson’s finding. He submits it is not necessary to have a financial interest for the persons who direct another to engage in fraudulent conduct to be privies to the person who engages in the conduct on their direction. He refers to the Court’s finding that “it remains arguable by the applicants that they do not have the community of interest in the outcome of the Liability Judgment as is required to make them privies”12 and submits that they are clearly privies and that proposition must be capable of serious and bona fide argument in the Court of Appeal.
Costs and delay if an appeal is justified
[23] Mr Judd submits that the Court’s finding that the three applicants have substantial grounds of defence means that, if the finding is correct, Mr Moeke cannot obtain summary judgment against any of the second defendants and in all probability the Judgment would preclude him from obtaining summary judgment against any of the defendants.
[24] Mr Judd submits the basis for this is that the test as to whether summary judgment is granted is whether the plaintiff satisfies the Court that the defendant has no defence.13 If the defendant has an arguable defence, a summary judgment will not be granted. He submits, by contrast, where the defendant is seeking leave to file a notice of opposition and supporting affidavit out of time, the applicant for leave must demonstrate that the applicant has a “substantial” defence and the obligation to satisfy the Court that the substantial defence exists rests on the defendant. He submits that as the test for leave is more stringent than the test for summary judgment, it is inevitable that Mr Moeke claims for a summary judgment, at least in respect of some of the defendants, will fail as a result the Judgment and hence the appeal has sufficient private interest for Mr Moeke to justify the cost and delay of the appeal.
12 Moeke v Eparaima, above n 1, at [42(d)].
13 High Court Rules 2016, r 12.2(1).
Submissions of the fourth-named second defendant (Mr Machen)
[25] Mr Gurnick, for the fourth-named second defendant, Mr Machen, refers to the high threshold for leave to appeal set out in the Greendrake decision and submits that the application does not meet that high threshold.14 He refers to the questions of law on which Mr Moeke relies as the basis for the application for leave to appeal as set out at [9] of this judgment and makes the following submissions:
(a)It is acknowledged that the correct interpretation of r 12.9(3) is a matter that is potentially of public interest, but consideration of r 12.9(3) was not determinative of the Judgment and there are other substantive grounds which support the granting of leave to file a notice of opposition.
(b)The questions of law summarised at [9] of this judgment are the same grounds on which Mr Moeke asserts that he is entitled to summary judgment. In essence, the grounds for appeal are such that Mr Moeke is seeking a “trial run” of his substantive arguments against the other defendants under his summary judgment claim (save for the issue of the correct interpretation of r 12.9(3)) and the other questions of law will be central to the summary judgment hearing and can be more appropriately determined in that context.
(c)If leave to appeal is declined, there will be no significant prejudice to Mr Moeke as the opposition of the three named second defendants who were granted leave would be on the same basis as the other second defendants.Mr Moeke is aware of the defences raised and consequently will face no further cost in proceeding with his summary judgment application with the three named second defendants included.
(d)The matter is ready to proceed to a summary judgment hearing and further delay and cost to address the proposed appeal is not justified.
14 Greendrake v District Court of New Zealand above, n 4.
Submissions of the third-named and seventh-named second defendants (Mr Glucina and Mr van Rooijen)
[26] Mr Fisher, for the third-named second defendant, Mr Glucina, and the seventh- named second defendant, Mr van Rooijen, submits that it is not in the interests of justice to grant leave to appeal for the following reasons:
(a)it is an inefficient use of resources of the Court and of the parties for a case management decision to be appealed (granting an application for leave pursuant to r 12.9 of the High Court Rules) when the legal points in question can be fully argued at the summary judgment hearing and then, if appropriate, taken on appeal;
(b)it is seriously arguable that it would not produce a “fair and just result”15 for Messrs Glucina and van Rooijen to be subject to a finding of dishonesty without their having been given an opportunity to be heard, particularly when:
(i)it would have been open to Associate Judge Sargisson in the Liability Judgment to find, had it been argued before her, that the unlawful means employed by the SWDC and RIDL consisted of a breach of contract and/or the tort of procuring a breach of contract, neither of which requires dishonesty;
(ii)neither counsel before Associate Judge Sargisson made detailed submissions on the policy considerations associated with the unlawful means element of the tort and, as the Judge acknowledged, there was no authority on the point.16
(c)in order for Mr Moeke to succeed in an appeal from the Judgment, it would be necessary to satisfy the Court of Appeal that, among other things, the point made in [26(b)] above is not reasonably arguable, which has no reasonable prospect of success;
15 Moeke v Raukawa Iwi Developments Limited, above n 8, at [50]–[51] and [53].
16 Moeke v Raukawa Iwi Developments Limited, above n 8, at [50], [51].
(d)quite apart from whether Messrs Glucina and van Rooijen may be estopped from defending the allegations in the statement of claim, any such estoppel could not prevent them from opposing the application for summary judgment on the grounds that Mr Moeke is not entitled to the entry of summary judgment because he has not adduced any evidence in support of his application;
(e)if leave to appeal were granted, the appeal would be unlikely to be heard before Easter 2025, and such delay in the above circumstances is inordinate and unjustifiable.
[27] Expanding on the point of lack of evidence submitted by Mr Moeke, Mr Fisher submits that Mr Moeke has not adduced any evidence in support of his application for summary judgment and has only filed an affidavit verifying the allegations in his statement of claim. He submits that verification does not relieve Mr Moeke of his obligation to produce admissible evidence of the facts alleged in the statement of claim.
[28] Mr Fisher submits Mr Moeke cannot rely on the findings of fact by Associate Judge Sargisson in the Liability Judgment as evidence of the existence of any fact for the purpose of this proceeding, by virtue of s 50(1) of the Evidence Act 2006. He submits that s 50(2)(b) of the Evidence Act does not affect s 50(1) and it merely confirms the common law in relation to res judicata and issue estoppel is not affected by s 50(1), and thus the judgment may be relied upon to identify what facts and legal issues were in dispute in the previous proceeding, but not for the purposes of proving the existence of facts in this proceeding.17
Result
[29] I am of the view that Mr Moeke’s application for leave to appeal should be dismissed.
[30]The reasons for my view are:
17 Andru Isac (ed) Cross on Evidence (online ed, LexisNexis) at [CHA 4.1].
(a)While the interpretation of r 12.9(3) might be of public importance, it was not central to the Judgment and is not a sufficient reason to justify the appeal.
(b)The questions of law which Mr Judd submits are capable of bona fide and serious argument, as set out in [9] of this judgment, are largely predicated on the basis that it has been proved that the defendants knew two things: that there was an existing agreement between RIDL and Mr Moeke and the defendants knew they were causing SWDC to enter into an agreement to buy the property from RIDL to defeat Mr Moeke’s interest. Mr Judd submits that this establishes dishonesty on the part of the councillors. However, as has been submitted by Mr Fisher, Mr Moeke has not adduced any evidence other than the affidavit verifying the statement of claim. As was stated in the Judgment, the states of mind of the defendants when SWDC entered into the Second Agreement has not been the subject of evidence.
(c)An aspect of the principle of estoppel is that holding the party to be estopped must be a fair and just result to that party. In my view it is clearly unjust for the defendants to be found liable of dishonest conduct when they were not party to the Liability Judgment and there were no specific findings of dishonesty against the defendants in the Liability Judgment.
(d)As to the applicability of Said v Butt, Mr Fisher has raised the argument that another way of framing the tort in the Liability Judgment would have been that the unlawful means employed by SWDC and RIDL consisted of breach of contract and/or the tort of procuring breach of contract, neither of which requires dishonesty. This was not argued before Associate Judge Sargisson and she acknowledged there was no authority on the point.
(e)The submission has been made by Mr Gurnick that the grounds for leave to appeal are essentially the grounds for the summary judgment
application made by Mr Moeke and Mr Moeke is seeking a “dry run” in respect of these arguments under the appeal. In my view these arguments should properly be dealt with in the summary judgment hearing as, even if the three defendants granted leave by the Judgment are not entitled to oppose the summary judgment application, the opposition of the remainder of the second defendants and the other defendants will result in the hearing occurring in any event.
(f)As to cost and delay, the majority of points which are the grounds for leave to appeal are essentially summary judgment arguments, and the cost and delay involved in the appeal are not justified when these arguments will be fully heard in the summary judgment application which is ready to go to trial.
(g)There is no prejudice to Mr Moeke if the three named second defendants are permitted to maintain their opposition to the summary judgment application as their defences to it are similar to the other second defendants, and therefore there will be no further cost to Mr Moeke in pursuing his summary judgment application.
Orders
[31]I make the following orders:
(a)Mr Moeke’s application for leave to appeal is dismissed.
(b)Costs are reserved as they will be more appropriately dealt with at the hearing of Mr Moeke’s summary judgment application.
…………………………….. Associate Judge Taylor
Solicitors:
Ken J Patterson, Tauranga, for the Plaintiff
Neilsen Law (David Nielsen), Hamilton, for Mr Bill Machen, Second Defendant
Clancy Fisher Oxner & Bryant (Paul Fisher), Tokoroa, for Mr Marin Glucina and Mr Herman van Rooijen
Counsel:
Gary J Judd KC, Kerikeri, for the Plaintiff
Michael J Fisher/J Yoon, Erskine Chambers, Auckland, for Mr Marin Glucina and Mr Herman van Rooijen James Gurnick, Riverbank Chambers, Hamilton, for Mr Bill Machen, Second Defendant
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