Globe Holdings Limited v Westham Holdings Limited HC Hamilton CIV 2004-419-1841

[2005] NZHC 1713

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2004-419-1841

BETWEEN  GLOBE HOLDINGS LIMITED

Plaintiff

AND  WESTHAM HOLDINGS LIMITED

First Defendant

AND  ROBERT SWETMAN

Second Defendant

Hearing:         3 May 2005 Appearances: E Horner for plaintiff

J Dorbu for defendants Judgment:       4 May 2005 at 13:30

JUDGMENT OF ASSOCIATE JUDGE FAIRE

[on application for summary judgment]

Solicitors:           Morrison Kent, PO Box 10 035, Wellington for plaintiff

Murdoch Hall & Co, PO Box 23 620, Hunters Corner for defendants

Globe Holdings Limited V Westham Holdings Limited And Anor HC HAM CIV 2004-419-1841 4 May 2005

[1]    The plaintiff seeks summary judgment. Ms Horner clarified the plaintiff’s position in submissions. The plaintiff seeks summary judgment by way of an order that the defendants do specifically perform an agreement dated 4 December 2004  and varied on terms contained in the plaintiff’s solicitor’s letter of 16  December 2004 and which was accepted by the defendants’ solicitor’s facsimile of 1 February 2005.

[2]    When this matter was first called on 28 February 2005, I inquired of counsel as to why a fixture was required. That is  because the notice of opposition contains the following statement:

The defendants have affirmed the agreement, as varied. They have never refused to perform the agreement and there is no need for a court order in order to perform the agreement.

[3]Unfortunately, the parties could not agree. This fixture was accordingly set.

[4]    Before analysing the facts it is appropriate to briefly review the approach which the Court takes in respect of an application for summary judgment. Rule 136 of the High Court Rules requires that the plaintiff satisfy the Court that the defendant has no defence. That was explained by the Court of Appeal in Pemberton  v  Chappell [1987] 1 NZLR 1 at 3 as follows:

In this context the words "no defence" have reference to the absence of any real question to be tried. That notion has been expressed in a variety of  ways, as for example, no bona fide defence, no reasonable ground  of defence, no fairly arguable defence.

[5]The Court added at 4:

Satisfaction here indicates that the Court is confident, sure, convinced, is persuaded to the point of belief, is left without any real doubt or uncertainty.

...

[6]And, further, at 4:

Where the only arguable defence is a question of law which is clearcut and does not require findings of disputed facts or the ascertainment of further facts, the Court should normally decide it on the application for summary judgment, just as it will do on an application to strike out a claim or defence before trial on the ground that it raises no cause of action or no defence.

[7]    The Court also commented on the position where a defence is not evident on a plaintiff’s pleading and said at 3:

If a defence is not evident on a plaintiff’s pleading I am of the opinion that if the defendant wishes to resist summary judgment he must file an affidavit in answer raising an issue of fact or law and give reasonable particulars of the matter which is claimed ought to be in issue. In this way a fair and just balance will be struck between the plaintiff’s right to have the case proceed to judgment without tedious delay and the defendant’s right to put forward a real defence.

[8]That position was further reinforced in AGC (New Zealand) Ltd v McBeth

[1992] 3 NZLR 54 at 59 where the Court said:

Although the onus is upon the plaintiff there is upon the defendant a need to provide some evidential foundation for the defences which are raised. If not, the plaintiff's verification stands unchallenged and ought to be accepted unless it is patently wrong.

[9]    Hypothetical possibilities in vague terms, unsupported by any positive assertion or positive documents advanced by a defendant will not frustrate the obligations on a plaintiff to discharge the onus of proof: SH Lock (NZ) Ltd v Oremland HC AK CP641-86 19 August 1986.

[10]   It is common ground that the plaintiff and defendants entered into a contract for the defendants to purchase a property at 430 Oneriri, Kaiwaka, Northland on 4 December 2004. The agreement provided a purchase price of $12,500,000  plus GST, if any. Clause 36 required:

a)A deposit of $500,000.00 to be paid to the vendor’s solicitor’s trust account within two days of the execution of the agreement; and

b)A further $500,000.00 payable to the vendor’s solicitor’s trust account on 28 February 2005.

[11]   The deposit was not paid on 6 December 2004. The plaintiff’s solicitors wrote to the defendants’ solicitors making demand for payment of that deposit on 8 December 2004. The letter referred to paragraph 2.2 of the contract and gave notice requiring payment of the deposit within three working days of the date of the notice.

[12]   No payment was received. The plaintiff’s solicitors then wrote to the defendants’ solicitors on 16 December 2004. That set out their understanding of discussions held directly between the clients relating to a variation of the contract. The terms of the variation are set out in paragraph 6 of the letter and are as follows:

6.We understand from discussions between our respective clients that your client would like to vary the contract to provide as follows:

(a)immediate payment of deposit $500,000;

(b)a further deposit payment of $500,000 on or before 20 January 2005;

(c)a further deposit payment of $500,000 on or before March 2005;

(d)settlement deferred to 31 May 2005;

(e)purchase price increased to $13,000.000 plus GST.

Otherwise the terms of the agreement dated 4 December are confirmed.

7.Our client expects to be able to accommodate that proposal but will need to make appropriate arrangements with its Vendor. It will do  so on the basis that the initial $500,000 is paid by way of bank cheque to the credit of our trust account before 4:00pm Friday 17 December 2004.

8.Unfortunately if the initial tranche of the deposit is not paid by 4:00pm Friday then the agreement will be as it currently stands and we have instructions to prepare and issue summary judgment proceedings against Westham Holdings Limited and Robert Swetman for the payment of the deposit. We expect these will be ready to be filed and served before Christmas. Would you please confirm by return that you are authorised to receive service, as we have no wish to serve Mr Swetman personally in the middle of the Christmas period. As you will appreciate the costs associated with the preparation of the proceedings will be sought from the purchaser and will be issued without prejudice to our other client’s rights and remedies under the agreement.

[13]   The letter received no immediate response. A draft copy statement of claim was forwarded with the plaintiff’s solicitor’s letter of 20 December 2004. The plaintiff’s director swore an affidavit in support of that statement of claim on 22 December 2004. The proceeding was then filed on 23 December 2004. The proceeding was served on the first defendant on 14 January 2005. There followed a

significant development. On 1 February 2005 the defendants’ solicitors facsimiled the plaintiff’s solicitors as follows:

We confirm on behalf of our clients that the agreement between our clients for the Oneriri Road, Kaipara property is varied as set out in your letter  of the 16th December 2004.

[14]   Despite the confirmation of the variation no deposit or part-payment was made. On 9 February 2005 the plaintiff’s solicitors made demand for $1,000,000 being the first $500,000 deposit and the second payment due in terms of the varied agreement contained in the 16 December 2004 letter. No payment was forthcoming.

[15]   The plaintiff filed an amended statement of claim, duly verified, on 18 February 2005. It incorporated a pleading concerning the variation of the agreement by virtue of the 16 December 2004 letter and the facsimiled acceptance of 1  February 2005. Those documents were served on the first defendant on 18 February 2005.

[16]In an affidavit in opposition, the second defendant says:

5.The agreement  involves  a  substantial  financial  transaction,  worth now $13,000.000 plus GST. The loan process took some time and involved a lot of paperwork. There was an initial delay in getting all the loan amounts processed. I can now confirm, however, that the loans have been approved and all the paperwork with the bank is substantially completed. The agreement will settle on the settlement date as agreed with the plaintiff.

…

7. For the above reasons, I believe that the defendants would not be prejudiced if an order for specific performance were made, except that they will oppose any order as to costs incidental to this action. This is because there is really no need to bring the proceeding.

[17]   The above facts disclose that, at the time of the filing of the application for summary judgment, the defendants were in breach. Despite Mr Dorbu’s submission to the contrary, all the evidence discloses that both defendants are jointly and severally liable. In the first place, that is provided for in clause 1.3(1) of the sale and purchase contract. In the second place, however, there is no denial of that position either in the notice of opposition or in the second defendant’s affidavit in opposition. Quite the reverse is the case, where Mr Swetman uses the term “defendants” to refer

to the first defendant and himself throughout and, in particular, confirms his expectation that both will perform the contract.

[18]   At the time of the filing of the proceeding both defendants were in breach of the obligation to make the first deposit payment. At that point in time,  the  application for summary judgment was therefore clearly justified. The fact that a change of situation occurred when the parties agreed to a variation does not, in my view, invalidate the application for summary judgment that has been made. The amended statement of claim which covers the varied terms and which has been duly verified, now supports the form of specific performance sought by the plaintiff.

[19]   The position, in my view, fits within rr 5 and 11 of the High Court Rules. This is a case where the application for summary judgment can be amended. It  meets the requirements which are required to justify an amendment, namely:

a)That the amendment is in the interests of justice;

b)That it will not significantly prejudice the defendant; and

c)It will not cause significant delay: Elders Pastoral Limited v Marr

[1987] 2 PRNZ 383 at 385.

[20]   The Court of Appeal in Cegami Investments Limited v AMP Financial Corp (NZ) Limited [1990] 2 NZLR 308 confirmed that amendments to the proceedings were possible in the summary judgment procedure. When I analyse the facts that I have recorded in this judgment, all three bases for dealing with amendments are met and justify the amendment that is sought by the plaintiff. The plaintiff is completely blameless in what has happened. The defendants have plainly not complied with the contractual obligations both under the contract before variation and subsequent to variation. Further an attempt to suggest that the second defendant be not bound by a decree of specific performance is not justified when one considers the contract itself, and the evidence that was adduced in the form of Mr Swetman’s affidavit. Counsel for the plaintiff has confirmed the plaintiff’s readiness and willingness to settlement

this agreement as varied on 31 May 2005. Had it not been for that assurance I would not have contemplated making an order for specific performance.

[21]The position in summary, then, is:

a)The defendants have failed to make payments required under both the original and varied sale and purchase contracts. That is clearly a breach of the contracts;

b)The defendants point to no prejudice in the event that a decree of specific performance is made against them;

c)The plaintiff, by counsel, confirms the plaintiff’s readiness and willingness to settle the transaction as at 31 May 2005;

d)No reason has been advanced which would justify me not ordering a decree of specific performance in this case. For example, there is no suggestion of a lack of finance or other inability to settle.

Judgment

[22]   Judgment is entered for the plaintiff by way of an order that the  defendants do specifically perform the sale and purchase contract dated 4 December 2004 and varied by the plaintiff’s solicitor’s letter of 16 December 2004 in respect of the property at 430 Oneriri Road, Kaiwaka. The defendants shall make payment of the sum of $1,500,000 forthwith on the issue of this judgment. The defendants shall otherwise settle the transaction on 31 May 2005.

Costs

[23]   The argument before me occupied ¼ of a day. The position adopted by the defendants, in my view, was without merit. The plaintiff is entitled to costs based on Category 2 Band B and based on a fixture of ¼ day’s duration plus disbursements as fixed by the Registrar.

JA Faire Associate Judge