Hersche v Blackburn HC Whangarei CP13/00

[2002] NZHC 26

IN THE HIGH COURT OF NEW ZEALAND
WHANGAREI REGISTRY CP13/00

BETWEEN ISABELLA HERSCHE
Plaintiff

AND FRITZ BLACKBURN
Defendant

Date: 30 January 2002

Counsel: R Mark for plaintiff
R Bell for defendant

JUDGMENT OF MASTER GAMBRILL

Solicitors:
Fortune Manning, DX CP 21503, Auckland for plaintiff
Webb Ross Johnson, PO Box 945, Whangarei for defendant

[1] This is an application by the defendant for a question to be determined prior to trial. The application is made in reliance on Rules 417 and 418. The issue is whether the deed signed by the plaintiff and the defendant dated 2 June 1995 is voidable for undue influence. The plaintiff pleads lack of understanding of the English language.

[2] This case has been before the Court for over two years, and has had a chequered career as Mr Blackburn has been unable to present to the Court a substantial amount of records of the moneys received from the plaintiff’s family in Germany and banked in his accounts the plaintiff says during the relationship. Three different counsel have been involved in acting for the defendant and there has been considerable delay. At this point in time I gather the defendant is still seeking legal aid.

[3] A property sharing agreement was entered into by the parties on 2 June 1995 whilst the parties were still in a relationship, but anticipating a separation of which there is a dispute as to whether it effectively took place in that year or five years later.

[4] The plaintiff claims that she was unduly induced to enter into the property agreement because of the undue influence of the defendant. She pleads the particulars of why she claims undue influence and she pleads the agreement is manifestly unfair.

[5] It appears that the defendant owns a property with an accommodation unit on it. Pursuant to the agreement, this property of 3610 sqm, about three-quarters of an acre, was transferred to the plaintiff in consideration for her entering into the agreement. She has pleaded numbers of payments which she says have been muddled since the joint ownership, both prior to 1995 and the start of the relationship in 1989, to the conclusion of the relationship about the year 2000.

[6] In March 1991 a property of 25 hectares was purchased in Wells Road which was put into the defendant’s name. The plaintiff says she paid most of the purchase price. The property was subdivided into four lots. One lot has been sold to Ms Lorraine Smith for $35,000 and three properties are still in the defendant’s name. On lot 2 the plaintiff says she paid all the costs of materials. She has identified a number of sums transferred to New Zealand and she says she believes this should have been jointly owned.

[7] However, by 1995 the property agreement was signed, and the defendant says the plaintiff can have no claim against the substantive asset, namely three properties and the house in Wells Road. The plaintiff says she has made the major contribution and is entitled to a share and she was unduly influenced.

[8] The defendant’s counsel says the Court should determine whether there has been undue influence which was exerted when the plaintiff signed the property agreement. If that agreement is effective and binding the plaintiff has no claim. The plaintiff’s case is the Court should look at the whole circumstances of the case. She says her pleading is deemed to be capable of proof, that is she was unduly influenced. I am told from the bar there is evidence she received inadequate advice, the defendant drove her to the solicitor’s office, waited while she signed the document, and paid the account for the signing of the document. The plaintiff’s case is the issue should not be determined prior to trial as the Court will need to canvass all the evidence of the relationship, the sending of the funds and payments into the account and the circumstances in which:

[a] The major property asset was bought in 1991, and

[b] The fact that the 1995 agreement gave the plaintiff a property of minimal value in relation to the property retained by the defendant.

[9] Clearly even the pleadings show it is accepted by way of the statement of defence that the original purchase of the land in 1991 was substantially funded by the plaintiff.

[10] The Court on the one hand has to consider the risk of a four day trial, or a two day trial. It also must consider the duplication of evidence and the risk that the evidence could be interpreted in a different manner in one trial from the other. Courts have been diffident about allowing separate issues to go to trial, more particularly in the case of mixed factor law, and in this case it could be to a large extent a factual dispute which must be resolved.

[11] Turning to the grounds as outlined in McGechan under R 418, Barker J in Rio Beverages Ltd v the Golden Circle Cannery [1992] BCL 569, noted the following factors:

[a] Delay in finally resolving the proceedings;

[b] Length of the hearing of the preliminary questions;

[c] Whether a decision one way or the other would result in the end of the litigation;

[d] The fact of any subsequent hearing and in particular whether any subsequent hearing time would be shortened by a preliminary question; and

[e] A balancing of the advantages for parties and public interest in shortening litigation as against any disadvantages averted by the public party.

[12] In my view this matter could delay the final decision in the proceedings if the defendant was not successful in the application made. There is an additional factor, that both parties either seek, or are at present on, legal aid and although the determination of a single issue may seem a cheaper alternative, if the defendant’s contention is right, he submits the matter will be determined by the evidence of the solicitors and the production of the document.

[13] There is too an issue as to the understanding and intent of the parties at the time the documents were signed. Much of the evidence for the first seven years of the relationship would need to be canvassed to set the background if the plaintiff is to succeed in persuading the Court as to her limited grasp of English, the intention she understood of the building of property and her lack of understanding for the reasons the deed was entered into.

[14] I accept that if undue influence were found to have been exerted by the defendant, leading to execution of the deed in circumstances which would lead the Court free to find the deed voidable, this would leave the litigation alive.

[15] At the end of the day, it appears it would take at least two days to hear the evidence and make a decision whether the deed is or is not enforceable, and can be challenged by the claim of undue influence. If the deed is not enforceable then further evidence of the later relationship between the parties would be needed and would probably extend the hearing time by only one or two days.

[16] Counsel for the plaintiff says it would be stressful to face two hearings going through the evidence, because if the preliminary question is not determined in Mr Blackburn’s favour, then the whole of the material has to be reheard for the plaintiff to make out her case.

[17] In my view there is a problem in fragmenting this issue, as to whether the deed is voidable or not, with the whole matrix of the relationship, and if the plaintiff is to succeed in her claim she will have to persuade the Court the deed is voidable. To do this the Court will need to hear evidence as to the conduct in the relationship over the six years prior to the making of the deed. I accept the single issue determination appears to be a short cut, but there could be further delay, anxiety and only limited further expense as a large amount of the work will have to go into the briefs relating to the actions of the parties prior to 1995. This is a case in my view where so much will be determined by personal evidence of the parties, not technical, professional or evidence that relates to easily identifiable matters, as for example a valuation of a property. Finally, it does not relate to a matter of law except as to the application of the evidence to the law as to voidable deeds, and the legal position as to undue influence. I believe the matter should not be separated out on a defended trial, but that counsel should proceed to get ready to proceed to trial.

[18] The application is accordingly refused. Costs are fixed at 2B on the filing of the application, preparation and hearing should be at a shortened time, allowing two hours for the total sum but at a 2B scale in favour of the plaintiff.

[19] I am unaware of the effect of the costs decision because I understand the applications for legal aid for the defendant have been made but not granted and the plaintiff has legal aid. If this costs decision cannot be implemented and further directions are needed the matter can be addressed at the next mention on 6 March 2002 at 11am when I expect to be advised discovery is complete and the matter is ready for trial.