Haines v Herd
[2016] NZHC 1928
•18 August 2016
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV 2014-488-187 [2016] NZHC 1928
BETWEEN RODNEY DAVID HAINES AND
KATHLEEN ANNE NORMAN Plaintiffs
AND
ROBERT JOHN HERD First Defendant
RHUMBA HOLDINGS LIMITED Second Defendant
Hearing: 8 June 2016 Counsel:
N Gedye QC for Plaintiffs
D Bigio for DefendantsJudgment:
18 August 2016
JUDGMENT OF DUFFY J
This judgment was delivered by me on 18 August 2016 at 4.00 pm pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Solicitors / Counsel:
Richard Mark, Barrister & Solicitor, Kerikeri
Glaister Ennor, Auckland
D Bigio, Barrister, Auckland
HAINES v HERD [2016] NZHC 1928 [18 August 2016]
[1] The plaintiffs in this proceeding (Haines) are reviewing the decision of
Bell AJ in which he ruled that the suitable forum for this proceeding is Vanuatu.1
The first and second defendants (Herd and Rhumba respectively) oppose the review.
[2] A decision on a forum non conveniens application is a discretionary one, and therefore an appellate court will not interfere unless a material error of principle has been made.2 In Schumacher v Summer Grove Estates the Court of Appeal stated this
principle in relation to the decision being made by a trial judge.3 In the present case
I am determining a review of a decision made by an Associate Judge. However, I do not think this warrants a different approach. The criteria for establishing such errors are: (a) error of law or principle; (b) taking account of irrelevant considerations; (c) failing to take account of relevant considerations; or (d) the decision is plainly
wrong.4
[3] However, another basis for an appellate court interfering with the exercise of a discretion is when there has been a material change of circumstance since the decision in the court of first instance was made. This can be viewed as a separate ground for interfering with the decision on review, or simply as a basis for establishing that the initial decision is one that due to the change of circumstance is now either plainly wrong or otherwise qualifies in terms of the criteria for when an appellate court will interfere with the exercise of a discretion.
[4] Haines has now filed a proposed draft amended statement of claim which materially alters the grounds of the claim against Herd and Rhumba. Bell AJ was influenced by a potential defence raised by Herd and Rhumba that relied upon the land law of Vanuatu. This related to whether, as part of the consideration that was due under the contract for sale of a vessel, Herd was in a position to deliver title to land in Vanuatu that came within the contract specification in cl 2.1(b) of the
variation deed.5 Bell AJ concluded that the resolution of this question would require
1 Haines v Herd [2015] NZHC 3365.
2 See Schumacher v Summergrove Estates [2014] NZCA 412, [2014] 3 NZLR 599 at [29].
3 Though in Schumacher, as in the present case, the initial decision was made by an Associate Judge; that decision was set aside by Woolford J on review, and then there was an appeal against his decision to the Court of Appeal.
4 See Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [32].
5 See Haines v Herd, above n 1, at [88].
knowledge of the law of real property in Vanuatu and accordingly “a Vanuatu court will obviously be at a greater advantage in applying its own law as to title to land than a New Zealand court.”6 In addition the Judge concluded that apart from Haines and Herd, the witnesses will be Vanuatu residents, which was another reason favouring Vanuatu as the forum conveniens.7
[5] The draft amended statement of claim has materially re-shaped Haines’ case against Herd and Rhumba. In its proposed form the draft amended statement of claim pleads:
(a) The existence of a written agreement made on or about 8 November
2011 between Haines and Herd whereby Haines agreed to sell the vessel “It’s Time” to Herd or Herd’s nominee for NZ$400,000 plus 50 percent ownership of five islands in Vanuatu.
(b) By deed dated 5 May 2012 Herd and the defendants agreed to vary
the original agreement for the sale of “It’s Time” (the variation deed).
(c) Clause 2(1)(b) of the variation deed provided that consideration for the purchase of “It’s Time” was to be payment of the sum of A$400,000 in cash to Haines and any interest that is due at the time of settlement, and the transfer to Haines or his nominee of A$400,000 worth of land in Vanuatu.
(d) Clause 4(1) of the variation deed required Herd to pay consideration
for “It’s Time” by 5 May 2013.
(e) Pursuant to cl 6.2 of the variation deed, legal title or ownership in “It’s Time” did not pass until payment of the consideration. Herd took possession of “It’s Time” on 28 April 2012, but failed to pay for it by 5 May 2013 or at any other time and accordingly it was
repossessed on 17 October 2013.
6 At [88].
7 At [90].
(f) Clause 19 of the variation deed provided for what was to occur if there was a default of the variation deed. In particular, cl 9.1 provided that where the consideration for the purchase of “It’s Time” had not been paid in terms of cl 4.1, Herd would be in default of the deed. Clause 9.2 required Haines to give Herd 30 days notice of intention to exercise his rights on default. Clause 9.3 provided that on expiry of the notice Haines could then take possession of “It’s Time” and resell it subject to certain conditions.
[6] Herd has provided an affidavit in which he confirms that cl 2 of the variation deed provided for three different payment options for the purchase of “It’s Time”. He accepts that option 1 and option 3 did not occur, and accordingly he acknowledges that the purchase price of “It’s Time” was governed by option 2 which was contained in cl 2.1(b) of the variation deed, with settlement to occur in the manner prescribed by cl 4.1 of the variation deed.
[7] On 26 August 2013 Haines served a default notice as per cl 9.2 of the variation deed on Herd.
[8] On 6 September 2013 Herd wrote to Haines alleging, inter alia, that Haines by his conduct had extended the settlement date until 26 September 2013, which was also when he served the default notice. Herd asserted that Haines had repudiated their agreement by making demands that were not provided for in the variation deed. Herd then asserted that if the variation deed remained on foot, “which is not admitted”, Haines’ rights and Herd’s obligations were to be determined by the variation deed, and in particular cl 9. Herd noted that if he did not pay Haines “$400,000” cash and provide “$400,000 worth of land in Vanuatu by 26 September
2013” Haines’ remedy was to be found in cl 9 of the variation deed.
[9] There appeared to be no dispute between the parties that Herd did not pay
$400,000 in cash by either 5 May 2013, or by the later date asserted by Herd to be the extension date of 26 September 2013. Herd did not provide $400,000 worth of land in Vanuatu by either 5 May 2013 or by 26 September 2013; though there is correspondence from Herd in which he alleges he did offer land of that value to
Haines. However, Herd acknowledges in this evidence that the offers did not strictly comply with the “timing” requirements of the variation deed, being instead proposals made in the course of ongoing dialogue to try and close the deal even after the default notice was issued. Thus he does not appear to assert that at all material times he had either discharged or attempted to discharge his obligations under the variation deed in accordance with its terms.
[10] On 20 February 2014 Herd gave notice purporting to cancel the variation deed. Thus, on all counts now the agreement between the parties is at an end. The issue now being, who is the one responsible for wrongly ending it.
[11] The relief sought is an enquiry into losses suffered to date, judgment for the amount determined by such enquiry, a declaration as to those losses, interest on all judgment sums and costs. Haines also seeks judgment for the sum of $40,000, being an amount that Herd was liable to pay pursuant to cl 6.8 of the variation deed, and judgment against Rhumba under the guarantee, which is set out at cl 10 of the variation deed.
[12] It seems to me, therefore, that the dispute between the parties is now a straightforward dispute that turns on an interpretation of their rights and obligations under the variation deed.
[13] The variation deed, as with the original agreement for the purchase of “It’s Time”, was executed in Auckland. Whilst the variation deed provides that it is to be subject to Vanuatu law, excluding French law, it does not make Vanuatu the exclusive jurisdiction for determining rights and obligations under the deed.
[14] The law of Vanuatu, excluding French law, follows English common law and English legislation in force in Vanuatu. Relevant here is the English Sale of Goods Act 1893. Bell AJ found that applying the common law of Vanuatu would not be challenging for a New Zealand Judge as much of the relevant New Zealand law is
modelled on the same framework.8 Neither party suggests that Bell AJ erred in this
8 See Haines v Herd, above n 1, at [86].
regard. So, the presence of the clause conferring jurisdiction on Vanuatu is not determinative of the forum.
[15] Haines resides in New Zealand and Herd resides in Australia. For either of them New Zealand would be a suitable forum. Rhumba is a Vanuatu registered company.
[16] There is no dispute that the time for Herd to make payments under the variation deed has expired or that the agreement between Haines and Herd is now at an end. The vessel has now been seized by Haines. The issues at trial seem to me to be now whether Herd defaulted in making the payments he was obliged to make under the variation deed, or whether Haines’ insistence on Herd’s default and the consequential seizure of ‘It’s Time” repudiated the terms of the variation deed.
[17] The key witnesses seem to me now to be Haines and Herd. The assessment of the loss will require a valuation of the vessel but as it is now in New Zealand that task and the evidence it will provide are more easily undertaken in New Zealand. I can see no need for Vanuatu witnesses. The claim against Rhumba will hinge on the terms of the guarantee. Neither defendant has raised any defence based upon the guarantee not having been properly entered into, so there is no need to look beyond the terms of the guarantee when it comes to determining Haines’ claim against Rhumba.
[18] Clause 9.5 and 9.6 of the variation deed deal with the rights of Haines as mortgagee of Lot 58 of land in Vanuatu and Haines being able to apply the proceeds of the sale of the mortgaged land to the contract debt. Rhumba as guarantor was to secure its obligations under the guarantee by providing a mortgage over Lot 58. However, Haines does not seek to exercise his rights under the mortgage security. Haines’ position now is that Herd is in default of the variation deed, and accordingly Haines seeks a monetary sum for the loss he has suffered. Thus, the Court will not be required to make determinations in relation to this parcel of Vanuatu land.
[19] There is the consideration of A$400,000 worth of Vanuatu land that Herd was required to provide to Haines by 5 May 2013. In principle this might have required
an assessment of whether Herd offered suitable land in Vanuatu, which would entail an assessment of whether such land could be offered under Vanuatu law. However, Herd’s case is not that he offered land to Haines within the time constraints of the variation deed but Haines refused to accept it because of some issue relating to Vanuatu land law. Rather, it seems to be accepted by Herd that he never offered land within the time stipulated in the variation deed, or within any extended period of time that Herd contends Haines is purported to have given Herd under the variation deed. Herd does say he attempted to save the deal by making offers of land beyond the issue of the default notice. But, attempts to save a deal which fall outside performance of the contractual terms cannot be relied upon to remedy a breach of those terms. If they work they will keep the parties engaged in a commercial arrangement. If they do not work that is the end of the matter.
[20] From my reading of Bell AJ’s decision, the pivotal factor that weighed in favour of Vanuatu being the forum conveniens was what he perceived as the need for the trial Judge to have a sound understanding of Vanuatu land law. The other relevant factors were recognised by the Judge to be something that could readily be dealt with by a Court sitting in New Zealand. From my understanding of the re- shaped statement of claim, the land law of Vanuatu is now irrelevant, either to Haines’ claim or Herd’s defence of that claim. The obligations of Rhumba under the guarantee can just as easily be dealt with in New Zealand as they could be in Vanuatu.
[21] I am satisfied, therefore, that there has been such a material change to the shape of this proceeding that the question of the appropriate forum warrants a fresh look. Alternatively, it can be said that the proceeding has been re-shaped to the extent that the decision of Bell AJ is now plainly wrong in terms of the appropriate forum for hearing and determining the proceeding.
[22] I am also satisfied that Bell AJ’s assessment of the factors that favoured New Zealand as the forum conveniens was correct. Now that the factors the Judge relied upon to exclude New Zealand as the forum conveniens are no longer relevant, I consider that the weight of all the remaining relevant factors lies in favour of New Zealand as the forum conveniens.
Result
[23] The review is successful and Bell AJ’s decision is set aside. The forum conveniens for this proceeding is New Zealand.
[24] The parties have leave to file memoranda on costs.
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