Heenan v Smith
[2014] NZHC 2282
•19 September 2014
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV2012-409-2680 [2014] NZHC 2282
BETWEEN DAVID STANLEY HEENAN
Applicant
AND
ELLEN SMITH Respondent
Hearing: 18 September 2014 Appearances:
Applicant in Person
M J Wallace for RespondentDate:
19 September 2014
JUDGMENT OF WHATA J
Introduction
[1] Mr Heenan sought leave to commence proceedings against Ms Smith for a debt in the sum of $8,077 plus interest and costs and sought a bank cheque for the sum of $9,000. The basis for this claim was that Mr Heenan had paid for certain travel expenses on behalf of Ms Smith. Mr Heenan also seeks leave to be able to lodge a caveat on property in which Ms Smith holds an interest. It appears that the basis of the caveat is the claimed debt and an impending Property (Relationships) Act 1976 (PRA) claim.
Process
[2] Mr Heenan is a vexatious litigant1 and leave was granted to him to pursue this claim in debt on a conditional basis including that counsel be retained for the
HEENAN v SMITH [2014] NZHC 2282 [19 September 2014]
purposes of pleading and argument. The parties then entered into settlement discussions and it was then discovered that Ms Smith had in fact already paid
$6,710. In an effort to settle matters, Ms Smith then paid a further sum of $1,367 being the balance owing on the debt alleged. This payment was made in August
2013. Ms Smith then sought that I reconvene this matter to dispose of the proceedings. I responded that on the basis that Mr Heenan had not complied with the conditions to grant leave, there was nothing to be brought back for reconsideration.
[3] Most recently, however, Mr Heenan was advised by the District Land Registrar that his caveat registered by him in relation to Ms Smith’s property2 would lapse. He sought leave to commence proceedings to enable that caveat to be maintained and I directed that the application be deemed to be accepted on a limited basis, namely that I would still need to consider the substance of his application to commence proceedings. Apparently this document did not satisfy the Registrar.
[4] I convened a telephone conference. Mr Heenan maintained that he should be entitled to a caveat in relation to Ms Smith’s property and sought leave to commence proceedings to enable that to occur. He also made an application to join Ms Smith’s solicitor and counsel for various alleged misrepresentations to the Court. I will address that allegation separately below.
[5] Following the conference I decided that it would be appropriate for me to hear Mr Heenan’s claim given that Mr Heenan endeavoured quite properly to resolve matters by way of settlement negotiation and, as will become apparent, the dispute had narrowed substantially between the parties. In fact, based on the information filed by Mr Heenan the total he says that is now outstanding by way of debt to him is
the sum of $1,495.50. By contrast Mr Wallace submits that the total amount owing
1 Mr Heenan stressed to me that he should not be unfairly cast in this way given the recent judgment of Fogarty J. The Judge there found that Mr Heenan should be granted leave to among other things commence new proceedings in the High Court to seek judgment against Ms Gore that a District Court judgment in her favour was obtained by fraud. This judgment is said to be the genesis of subsequent litigation that lead to Mr Heenan’s vexatious litigant status. In this regard my reference to Mr Heenan’s status is simply to provide the proper context for the current proceedings.
2 Ms Smith holds a half share in her name and the balance as executor with another executor.
on the debt as originally pleaded has been discharged with the payment of the
$1,367.
The pleaded claim and payment
[6] I turn now to consider the merits of Mr Heenan’s claim and if there is an amount outstanding, whether that provides a proper basis for a notice of claim and caveat.
[7] In an affidavit of the facts produced by Mr Heenan he narrates the background to the debt he claims was owed by Ms Ellen Smith. In short, he says there was a 12 week extensive world trip effectively paid by him. This trip concluded on or about 3 November 2012. Mr Heenan then says their relationship soured and on about 21 November 2012 when Mr Heenan was ejected from Ms Smith’s premises and Ms Smith made it clear that she was going to refuse to honour what he called a contractual agreement to reimburse Mr Heenan for the sum of $16,154 that she knowingly owed.
[8] Mr Heenan then commenced proceedings seeking the following orders:
16.
WHEREFORE, the Applicants seek further Orders today 22nd May 2013 that Mrs Ellen Smith, is to be Ordered to pay 50 % of this agreed debt. Of
$16,154.00 = $8,077.00 plus interest and costs, immediately, by way of a
Bank cheque for $9,000.00 to D. S. Heenan, within 7 days by 29.5.2013.
[9] It is also noted:
PLEASE NOTE :
That if that $9,000.00 is not paid by 29.5.2013, then penalty interest rate, compounding each 90 days, at the penalty interest rate of 24 & shall apply, forthwith.
[10] It is now accepted by way of codicil dated 28 July 2013 that of the sum owing, $6,710 had in fact been paid on 2 August 2012. An amended amount is claimed in the sum of $2,290 plus compounding penalty interest at a rate of 25 per cent or $31.81 per day. The total claimed inclusive of interest is $2,862.50.
[11] A further sum was then paid of $1,367 in August 2013 on the basis, from Ms Smith’s perspective, of full and final settlement of the debt owing. But Mr Heenan insists that the base amount owing was the $9,000 as set out in his claim which left a shortfall of $2,862.50, including interest. With the payment of $1,367 this is said to leave $1,495.50 owing.
[12] Mr Heenan also now makes an application to join what he calls conspirators (including Mr Wallace as counsel for Ms Smith) as parties. Mr Heenan’s primary complaint is that Mr Wallace misled the Court with the following submission in a memorandum of 2 July 2014:
1.Counsel has made inquiries with the Registry and is today advised that Mr. Heenan has never filed the pleading as directed at paragraph [6](d) of the judgment of His Honour Whata J dated 31 May 2013.
[13] I can deal with this aspect succinctly. There is no misrepresentation. Mr Heenan had not filed pleadings “as directed” at [6](d) of my judgment. In any event, this was simply background material to a request that the leave application be brought back before me for reconsideration. There was nothing in it that was prejudicial to Mr Heenan.
Assessment
[14] The only difference between the parties is the amount claimed by Mr Heenan for “penalty interest”. The base debt was $8,077 and of that $6,710 had already been paid so the residual base debt was only $1,367. If I accept Mr Heenan’s base claim as pleaded, this was the amount owing as at 3 November 2013 being the date that
they returned from the overseas trip.3
3 As to the date the debt became due, Mr Heenan pleads the contract in this way: Reason 11.
A contract was agreed, on and before 7.8.2012, between Ellie Smith and Dave Heenan, that until Ellie Smiths funds came to hand, on or after 3.11.2012, ( the day that the trip ended ) that D.S. Heenan would supply those extra funds totalling $31,211.00 and Ellie Smith would fund $15,057.00 ( see attachment ( 1 ) Harvey World Travel’s detail statement for unequivocal evidence, beyond all shadow of any doubt, and is in fact total evidence within its self of an AGREED CONTRACT. ) which were contractually agreed, between the parties of Smith and Heenan, and that upon return to N.Z. that Ellen Smith would reimburse D.S. Heenan for that contractual difference total, of $16,154.00. (Emphasis added)
[15] Plainly, Mr Heenan’s claimed interest in the order of $1,000 in relation to the original base debt of $8,077 cannot be sustained. Mr Heenan was helpfully forthright about the reason for this additional amount. He was disappointed that Ms Smith ejected him after he had paid for the overseas trip. But that cannot provide a proper basis for his interest claim.
[16] Furthermore, a penalty interest rate of 25 per cent also has no merit whatsoever, there being no contract specifying such a rate and in any event it is manifestly excessive in terms of any real loss to Mr Heenan. His purported claim therefore for a residual sum of $1,495.50 had no prospect of success. Finally, any interest that may have been payable in relation to the residual debt of $1,367 owed as from 3 November 2013 until paid in August 2014, is very small.
[17] In the circumstances, I see no proper basis for Mr Heenan’s notice of claim and/or a caveat in relation to Ms Smith’s property.
[18] For completeness I have examined whether Mr Heenan might have a prima facie claim under the PRA. On the evidence available to me, Mr Heenan’s relationship with Ms Smith is (at most) characterised as a de facto relationship of short duration. It commenced when Ms Smith responded to an advertisement placed by Mr Heenan in a local newspaper in March 2012. The relationship was at an end by mid to late November 2012. Twelve weeks of the relationship involved a cruise, the costs of which were, by agreement, paid by both of them. There is otherwise no evidence that Mr Heenan made a substantial contribution to the relationship or other personal factors that might justify, in the interests of justice, even a prima facie claim
under the PRA.4
[19] Accordingly, I refuse to make the orders as sought by Mr Heenan for the
purposes of lodging a caveat in relation to Ms Smith’s property and/or for the
purpose of joining the solicitor and counsel for Ms Smith to this proceeding.
4 As to the threshold tests refer: Laing v Laing (1988) 4 NZFLR 629 (HC), and PH v GH [2013] NZFLR 387 at [54]-[56].
Costs
[20] As Ms Smith has been successful she is entitled to costs. I think that Mr Heenan is, however, deserving of a discount because of the steps taken by him to settle his claim. Therefore, I have come to the conclusion that the costs order should be limited to the sum of any outstanding interest owing on the debt claimed by Mr Heenan.
Solicitors:
M J Wallace, Christchurch
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