Hildred v Strong
[2007] NZCA 475
•31 October 2007
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IN THE COURT OF APPEAL OF NEW ZEALAND
CA287/05
[2007] NZCA 475BETWEENGLORIA ANNE YVONNE HILDRED
Appellant
ANDSHARON ANN STRONG
Respondent
Hearing:12 September 2007
Court:Hammond, Robertson and Wilson JJ
Counsel:H A Cull QC and L Watson for Appellant
K B Johnston for the Respondent
Judgment:31 October 2007 at 4 pm
JUDGMENT OF THE COURT
A THE APPEAL IS DISMISSED.
BThe respondent is entitled to costs of $6,000 together with usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Robertson J)
Introduction
[1] This is an appeal against the decision of MacKenzie J in which he held that a settlement agreement entered into between Gloria Hildred and Sharon Strong in June 2002 following mediation was the full and final settlement of all property and financial issues between them. This finding was subject only to an order under s 7(3)(c) of the Contractual Mistakes Act 1977 (CMA) deleting references to shares in, and a loan to, a company - Outlook Resources Limited (ORL) - with which they had been associated.
Factual circumstances
[2] The background was described by MacKenzie J in a way which has not been challenged:
[2] ... The parties met in 1990. At that time the plaintiff [Ms Hildred] was living at 20 The Parade, Paekakariki, which she owned. The defendant [Ms Strong] was then employed by the Wellington Unemployed Workers Union (“WUWU”), and the plaintiff was engaged by WUWU as a tutor. She was hired by the defendant for that position, and soon after they entered into their relationship together. The defendant moved into 20 The Parade. Soon after, they agreed upon an equal joint ownership of that property, and entered into an agreement to that effect in August 1991. In about May 1993, they purchased 19 The Parade as tenants in common in equal shares. They entered into a property agreement on 20 May 1993 which recorded that the defendant had contributed more than the plaintiff, the figures in that agreement being subsequently varied. They sold that property in 1998, and shortly afterwards purchased 19 Wellington Road, as tenants in common in unequal shares, 40% for the plaintiff and 60% for the defendant. In about March 2001, they purchased 17 The Parade as tenants in common in equal shares.
[3] For several years after the relationship commenced, the plaintiff and defendant were involved in running training courses, initially under the auspices of WUWU. In March 1991, a trust, known as the Unemployed Training Trust (“UTT”) was established. The defendant was the settlor. The original trustees were the defendant and Ms J L Marment. The plaintiff was appointed a trustee in place of Ms Marment in February 1992. Such of the assets of WUWU as were used in the provision of the training schemes were transferred to that trust. In March 1992, a company Outlook Resources Ltd (“ORL”) was established, the shares in which were initially held by UTT. The assets of UTT were transferred to ORL. From that time on, ORL operated the business of organising and running the training schemes. In May 1989, the UTT was wound up, and its assets (in essence, the shares in ORL) were transferred to the defendant, purportedly as beneficial owner.
[4] The major items of property which are in issue are:
(a) The properties at 17 and 20 The Parade and 19 Wellington Road;
(b) The shares in ORL;
(c) Two motor vehicles, a Honda and a Mazda.
[3] The parties’ relationship ended in December 2001. The amended Property (Relationships) Act 1976 (the Act), which came into force in respect of de facto relationships in existence as at 1 February 2002, therefore has no application.
[4] The division of their property was subject to the common law and equity principles set out in cases such as Lankow v Rose [1995] 1 NZLR 277 (CA) and Gormack v Scott (1995) 13 FRNZ 43 (CA).
[5] However, in May 2002 the parties decided to mediate their dispute and entered into a standard LEADR mediation agreement. Each prepared a comprehensive and detailed description of their position. They engaged an experienced senior barrister to act as mediator.
[6] There was a mediation on 26 June 2002 with their solicitors present. At the end of the day they signed a standard LEADR type settlement agreement as follows:
The parties agreed at mediation on 26 June 2002:
1.20 The Parade, Paekakariki and 19 Wellington Road, Paekakariki and the mortgages thereon will be the separate property and responsibility of Sharon Strong.
2.17 The Parade, Paekakariki, the mortgage thereon and the Outlook loan of $75,681.79 will be the separate property and responsibility of Gloria Hildred, save for the following:
(a) The north end of the property (including the cottage thereon) up to the existing surveying line shall be transferred to 20 The Parade and Sharon Strong shall pay to Gloria Hildred compensation of $10,000.
(b)Sharon Strong will meet any costs of subdivision and rearranging of securities in effecting the said transfer.
(c)Sharon Strong will have no involvement in the tenancy dispute regarding 17 The Parade.
3. Sharon Strong will pay Gloria Hildred $127,500.
4.Sharon Strong shall retain the Honda vehicle as her separate property and Gloria Hildred shall retain the Mazda vehicle as her separate property.
5. Sharon Strong shall supply to Gloria Hildred:
- Copy Home Maintenance manual
- IMAC computer and software
- Frog
- Executive desk
- Black chair
- Sun cabinet
- Weedeater
6. Gloria Hildred shall supply to Sharon Strong:
- Photos (to be agreed)
- Her signature releasing her IP rights on the Kapiti Telecentre
7.All other property in the possession of either party as at the date of this agreement shall remain her separate property, respectively.
8. All the above arrangements shall be implemented by 26 July 2002.
9.This agreement shall constitute a full and final settlement of all property and financial issues between the two parties and including Outlook Resources Ltd, whether pursuant to the Property (Relationships) Act 1976 or any other statute or rule of the common law or equity or otherwise howsoever arising.
[7] Within days the appellant said she felt “demoralised and dejected at the gross unfairness of the bargain” and there have been endeavours since then to avoid the settlement.
The litigation setting
[8] The starting point for resolution of this case has always been the Agreement to Mediate which the parties signed on 26 June 2002. Paragraph 1 provides:
The parties appoint a mediator to assist them to resolve the dispute that is briefly described in Item 1 in the Schedule to this agreement.
(Emphasis added.)
[9] The mediation was to be a process by which they resolved their dispute. The Court file does not contain, and no counsel have been able to advise, whether there ever was an Item 1, let alone a schedule to the agreement. However, in light of subsequent documents we treat the subject matter as all property and financial issues outstanding between the parties.
[10] A critical provision of the agreement was:
[9] Each party agrees to take part in the mediation in good faith.
[11] A breach of [9] was not pleaded. We leave for another day the potential of that provision in a dispute such as this.
[12] Paragraph 14 of the agreement provided:
Each party can, with the consent of the mediator, attend the mediation with one or more persons to assist or advise the parties.
[13] Throughout the mediation both Ms Strong and Ms Hildred had their lawyers with them.
[14] The Agreement to Mediate contained detailed provisions relating to confidentiality in [15]-[19] and [21] and, for the avoidance of any doubt on the topic, it concluded:
Confidentiality agreement to be signed by non-parties attending the mediation.
As the condition of my being present or participating in this mediation, I agree that I will (unless otherwise compelled by law) preserve total confidentiality in relation to the proceedings in this mediation and in relation to any exchanges that may come to my knowledge whether oral or documentary concerning the dispute passing between any of the participants in the mediation and the mediator or between any of the participants during the course of the mediation.
[15] In the hearing before MacKenzie J, the issue of confidentiality appears to have received no consideration. Before us both counsel (when confronted with the point by the Bench) adopted the view that the parties had mutually waived compliance with these requirements. In the circumstances, we accept counsel’s position for the purposes of the case, but reserve consideration of the force and effect of confidentiality when parties choose problem solving by mediation.
[16] It is equally important to note what the deal (which Ms Strong and Ms Hildred entered into as evidenced the by the Mediation Agreement) did not include. There was no suggestion that, in their resolving the dispute, they would achieve an outcome consistent with the law. Mediation is not a Court proceeding in mufti. It is an alternative means of resolving a dispute.
[17] Ms Cull placed particular emphasis on clause 9 of the Settlement Agreement noted in [6] and contended that these words meant that the deal was in conformity with “the Property (Relationships) Act 1976 or any other statute or rule of the common law on equity or otherwise howsoever arising”. We do not accept that interpretation. Clause 9 is a standard bar to either party initiating proceedings with regard to the subject matter of the settlement in any way whatsoever. The prohibition on future action does not inform or influence the basis of the agreement which they made.
[18] From the moment they separated, both parties had legal advice. Either could have issued proceedings to obtain a division of property in accordance with the way properties were registered, or to have all matters outstanding between them resolved on the basis of constructive trusts, reasonable expectation or any of the other approaches which the Court has developed to deliver justice between parties in circumstances such as theirs.
[19] From early correspondence it was clear that there were very different perceptions as to what should occur. Although much information was exchanged, there may have been some unanswered requests. These mature, advised and experienced women did not turn to the Courts but mutually agreed to deal with matters themselves.
[20] It may be that, had some other approach been adopted, there could have been a different outcome. If there had been a full-blown hearing in the High Court on the basis of the principles which have been developed with regard to relationships of this sort prior to the Act, a Court may have ordered a different division.
[21] The same can be said about any case which is compromised whether after a formal mediation process or not. It is the nature of alternative dispute resolutions. The parties decide that the value, benefit and advantage in putting a matter behind them outweighs the advantage which would flow from full-scale litigation.
[22] Parties are often influenced by questions of cost. There are issues of containment, finality, emotional strain and commercial convenience which are weighed. Every piece of litigation has risk attached to it. If parties choose to make their own bargain so as to eliminate such risk, only in exceptional circumstances can they have the Court permit them the opportunity to start again by engaging in conventional litigation.
[23] The position was succinctly described by MacKenzie J at [47]:
… In this case the legal framework within which the possibility of injustice, and the remedy for avoiding injustice, are to be considered is the general law concerning the vitiation of contracts. A settlement agreement entered into by parties as the result of a mediation is a contract, and is effective to alter what would otherwise be the legal rights of the parties, subject to the legal principles which determine when a contract may be vitiated. However, agreements reached in settlement of a dispute, in particular a dispute of this nature, as a result of a mediation or some other dispute resolution process, have some special features which distinguish them from other contracts. The parties are not free agents, in the sense of having the choice whether to deal with each other or not. Their pre-existing dealings have given rise to a dispute which must be resolved. If it is not resolved by agreement, recourse to the courts will be necessary. Mediation must therefore be seen as a voluntary alternative to an otherwise compulsory process. The parties will have different views as to the strengths and weaknesses of their respective cases. Negotiations will reflect those different perceptions, and also the parties’ assessments of the likely litigation risk. At the mediation, which is necessarily, to some extent at least, an adversarial process, each party is likely to contend strongly for an outcome which is favourable and in accordance with that party’s perception of the merits of the dispute. Some parties will be more willing to compromise than others. These factors must be borne in mind in applying the principles which are relevant to the vitiation of contracts. The fact that the parties have, with independent assistance, reached an agreement to resolve their dispute must be given weight. Parties ought not lightly to be able to resile from a settlement. There is a public interest in the finality in dispute resolution processes, which must also be given weight. All of these considerations are important in deciding whether the threshold for vitiation of a contract has been reached.
[24] This accurately reflects, in a slightly different context, the comments of Lord Bingham in Haines v Carter [2003] 3 NZLR 605 (PC):
[39] It would have been open to Mr Haines and Ms Carter to have sought a legal determination of their respective property interests, whether from a Court or from an arbitral tribunal. In either event it would have been necessary to prove (or agree if possible) the relevant facts and apply the relevant legal rules to decide who was entitled to what. This process would probably have taken some time, would probably have required the parties to seek legal and other assistance and would probably have cost a significant sum of money. This was not the course the parties chose. … And the agreement which the parties made was in terms which no Judge or arbitrator could have ordered, reflecting not an evaluation of the parties’ respective legal rights and obligations but the bargain which they were willing to strike to achieve a prompt settlement.
The High Court hearing
[25] MacKenzie J noted that counsel for Ms Hildred opened on the basis that she was seeking “equitable remedies in respect of all the property”. The same flavour has permeated the appeal.
[26] The Judge noted that in a further amended statement claim (filed by leave at the opening of the trial) claims were advanced on the basis of:
(a) an express trust;
(b)the common intention of parties in the reasonable expectation of the appellant;
(c)a resulting trust in respect of the property of ORL;
(d)unjust enrichment of the respondent to the detriment of the appellant; and
(e)equitable estoppel.
[27] The final cause of action was that the agreement of 26 June 2002 was vitiated by mistake and should be set aside or rectified (pursuant to the CMA and the rules of common law and/or of equity).
[28] The causes of action were advanced in the wrong order, for as MacKenzie J correctly noted:
[7] In this case the application of these common law principles is affected by the settlement agreement entered into. That agreement specifically records that it was to be in full and final settlement of all property and financial issues between the parties, whether pursuant to the Act or any rule of common law or equity. Ms Cull, for the plaintiff, submitted in closing that the settlement agreement should be set aside, on a number of bases:
(a) duress
(b) unconscionability
(c) misrepresentation
(d) mistake
[8] As to duress, Ms Cull submits that the plaintiff and her then adviser were under duress in that they had no way of cross-checking the information given or statements made by the defendant because of the way in which the disclosure of information was made prior to the mediation. As to unconscionability, Ms Cull submits that the defendant failed to disclose relevant facts known to her, and asserted an entitlement which was inconsistent with those facts, taking advantage of the plaintiff’s ignorance of the facts, as part of a plan to secure a greater share in the proper division between the parties. As to mistake, it is alleged that assertions made by the defendant at the mediation were not able to be challenged and the parties, through their legal representatives, overlooked or were mistaken in their understanding of the elements of constructive trust, express trust, implied trust and reasonable expectations.
[29] Although the Judge specifically noted that the starting point had to be the contractual agreement between the parties, he went a considerable distance into a merits assessment of the bargain struck as against the yardstick of the relevant law.
[30] As noted during the appeal hearing, that position only arises if the agreement is not binding. Until that point is reached, what the division under the law would have been is not relevant.
[31] In the High Court, Ms Hildred asserted that the ORL shares were jointly owned while Ms Strong argued they were hers. MacKenzie J, however, determined that:
[54] … neither party had any beneficial interest in ORL which means that the parties proceeded in a wholly mistaken basis to the extent that they treated ORL as the property of either the respondent alone, or of the appellant, or of the appellant and the respondent jointly.
[55] The settlement agreement has dealt with the assets of ORL in two ways:
(a) the loan of $75,000 was made the separate responsibility of the plaintiff; and
(b) the agreement was said to constitute a full and final settlement of all issues between the parties including ORL. Because the shares in ORL were then vested in the defendant, that had the effect of acknowledging that ORL was the property of the defendant.
[56] Relief may be granted in respect of a mistake under s 6 if the mistake resulted at the time of the contract in a substantially unequal exchange of values. If ORL had been property which could properly be the subject of the settlement agreement, then, assuming a value for ORL of $60,000 plus the loan of $75,000, the agreement would have resulted in a division of 27% to the plaintiff and $73% to the defendant. In the light of the findings I have made, that would have been a substantially unequal exchange of values. If ORL had been excluded from the division, that unequal exchange of values would not have occurred. The effect of that is that the mistake as to ORL resulted at the time of contract in a substantially unequal exchange of value in terms of s 6. That enables relief to be granted under s 7. I consider that the proper course is to grant relief by way of variation of the settlement agreement, under s 7(3)(c), to remove the consequences of the mistake by excluding ORL and all matters relating to it. That would be achieved by deleting the reference in clause 2 to the ORL loan being the separate responsibility of the plaintiff, and by deleting the reference to ORL in clause 9. I consider that is appropriate because the possible investigation by the Solicitor-General of the breaches of trust to which I have referred may have consequences for both the plaintiff and the defendant that may give rise to other issues and claims between then. The resolution of any such issues or claims should not be complicated by the terms of the settlement agreement, based as it was on wholly wrong assumptions as to entitlement to ORL. Complications of that sort are best avoided by the deletion of references to ORL in both clause 2 and clause 9.
[32] Having considered the other challenges made to the Deed (none of which he found to be sustainable) he made the order under s 7(3)(c) of the CMA varying the settlement agreement by striking out reference to the debt to ORL and the shareholding in ORL. In all other aspects the agreement was valid and binding.
The practical result of the High Court case
[33] The High Court judgment absolved Ms Hildred from paying the $75,681.79 owing to ORL (although that debt is still owing and the responsibility of either or both of the parties) and Ms Strong lost the ORL shares registered in her name. At the time of the mediation no value had been attributed to the shares, but evidence at the High Court hearing contended that they were worth $121,588. We make no finding as to their value, but merely record the effect of the Judge’s decision on the parties’ own deal was an overall change in position of nearly $200,000.
The appeal setting
[34] Despite much more expansive submissions, at the commencement of the appeal hearing, the Court made clear that the most an appeal Court could do was declare that the agreement was void. The parties would then be free to take whatever action they saw fit to settle their dispute using the Courts or any form of alternative resolution. There could be no definitive assessment of the merits of their competing assertions as to what each party was entitled to under the applicable law.
[35] Both parties accepted that MacKenzie J’s findings with regard to the mortgage to ORL and the shares in ORL were correct and binding. Those issues were not in contention in this Court although the consequence with regard to the debt which clearly remains owing leaves uncertainty between the parties.
[36] As noted above, the parties jointly accepted that all the evidence which had been tendered was available (although much appeared to be in breach of the obligations as to confidentiality with regard to the mediation process). This Court accepted their position, subject to the essential rider that it was admissible only if it was relevant.
[37] Throughout the hearing, Ms Cull sought to challenge the mediation process by contending that the mediation focussed on legal ownership and contributions, misrepresentations by the respondent and consequent mistakes of law and fact.
[38] With respect to counsel, such allegations are speculation. We do not know (and should not know) what drove the mediation to a settlement. As noted in [16], these parties, when they determined “to resolve the dispute”, did not commit to finding a solution consistent with the law. None of us can know the extent to which either was influenced by extraneous (but important and understandable) factors in the bargain which they struck.
The crux issues
[39] In a helpful document lodged at the conclusion of her submissions, Ms Cull argued that the settlement agreement should be set aside because:
First, there had been an unconscionable bargain, based on the fact that the appellant suffered from informational deficiencies which were “seized upon” by the other party to the transaction in furtherance of her own ends.
The informational deficiency was attributable to the mis-statements by the respondent and the fact that the respondent was unlawfully in control of ORL, and therefore [had] access to its information (a special disadvantage, obtained unconscionably).
Second, there has been a common or shared mistake as to the correct legal ownership of the ORL shares, which was material to the appellant entering into the agreement.
[40] The appellant was contending that, although the ORL shareholding and debt were out of the settlement, the influence of them had so infected the division of property under the settlement that the agreement could not stand. In other words, it was argued that if both parties had known that the ORL shares were not their property at all, it is probable that there would have been a “resulting division of property more in favour of the appellant”.
Setting aside the Mediation Agreement
[41] The substantive submission was based on the contention that there was duress/unconscionability/misrepresentation or mistake such that the agreement of 26 June 2002 should be considered a nullity. This is said to be established by the Judge’s findings that:
(a) factual statements of the respondent at mediation were incorrect;
(b)evidence of the respondent at trial was not accepted;
(c)there were clear breaches of trust in relation to UTT; and
(d)the vesting of shares in ORL in the respondent was unlawful and in breach of trust.
[42] Courts frequently reject evidence because they find it unconvincing, or inconsistent with other material. That is part of the process of adjudication. It does not follow that, as a consequence, an associated agreement will be a nullity. The submissions at times suggested there had been deceit by the respondent, but there was no such pleading and there is no such finding by MacKenzie J and no evidential basis for us to draw such an inference.
[43] Although only mistake was pleaded in the further amended Statement of Claim which was filed by leave at the commencement of the High Court hearing, MacKenzie J comprehensively dealt with all the challenges which were raised by Ms Cull in her closing address. They are the same issues now raised before us, and again the attack is on a generalised basis. Counsel contended:
The process by which this mediation agreement was reached, was not only unsatisfactory but seriously flawed, because the respondent misled the appellant and the legal advisers at the mediation.
[44] This Court will not enter into a critique or analysis of what took place at a mediation. The exception to that principle is an inquiry as to whether a settlement was reached or, having been reached, could be set aside by invoking some other doctrine such as fraud. In this case those are not issues. A document was signed by the parties, and their signatures were witnessed by their own lawyers. It is clear that, at that stage, the parties were committed to an arrangement they agreed they were each able to live with.
[45] Ms Cull acknowledged that the Judge dealt with the claims of unconscionable conduct, duress, misrepresentation and mistake, but argued that he failed to consider the equally important principle that “if parties come to a mediation and settle a dispute on a wrong factual and legal basis and a party was misled, such agreement should not be upheld”.
[46] Such a generalised and open-ended principle would effectively mean that any mediation (and a settlement flowing from it) would be open to challenge. Adult, able parties who are separately represented must decide for themselves how much “hard information” they want before they enter into mediation. These two people had lived, worked and operated together for over a decade. The Court is not available as a means of enabling parties who say - we wish we had gone about things differently and been more careful and insistent – to get a second bite at the cherry.
[47] We reject the submission that there is some general catchall of the sort advanced on behalf of the appellant which goes beyond the specific matters which were advanced.
[48] For the avoidance of any doubt, we note that the appellant’s endeavours to gain assistance from the provisions of the Property (Relationships) Act are quite unproductive. The Act, with regard to de facto relationships, did not come into force until 1 February 2002. It has no application to their position. It is a specific statutory code. The Act has presumptions within it, and there are particular arrangements with regard to contracting out. Those statutory provisions cannot influence or affect in any way the decision which the Court must make in this instance.
Unconscionability
[49] Ms Cull accepted that MacKenzie J correctly articulated the test when he said:
[59] … The general principle upon which equity will intervene in respect of an unconscionable bargain is explained in O’Connor v Hart [1985] 1 NZLR 159 at 171 in these terms:
An unconscionable bargain … would be a bargain of an improvident character made by a poor or ignorant person acting without independent advice which cannot be shown to be a fair and reasonable transaction. “Fraud” in its equitable context does not mean, or is not confined to, deceit; “it means an unconscientious use of the power arising out of the circumstances and conditions of the contracting parties”; Earl of Aylesford v Morris [1873] 8 Ch App 484, 490. It is victimisation, which can consist either of the active extortion of a benefit or the passive acceptance of a benefit in unconscionable circumstances.
[50] He applied the principle to the facts of the case thus:
[60] In order to establish unconscionable dealing, it is necessary to show that one party is at a special disadvantage and that the other party has unconscionably taken advantage of it. Here, there was no disability on the part of the plaintiff, nor was there the type of relationship between the parties, of dependence, which may form a basis for a claim of unconscionability. The factor relied upon is the plaintiff’s alleged lack of knowledge and ignorance of the facts, and inadequate disclosure of information and documents by the defendant. I consider that those circumstances were not such that it could be said that the defendant has taken an unconscionable advantage of the plaintiff. Many of the facts were within the knowledge of the plaintiff as well as of the defendant. If the information was insufficient, then that is a matter which could have been addressed by some form of discovery process designed to meet the requirements of the case.
[51] Counsel submitted that the Judge failed to properly comprehend the notion of “special disadvantage”. This she did by reference to concepts of “situational” and “transactional” disadvantage, particularly as developed by Professor Rick Bigwood in Exploitative Contracts (1ed 2003) at 244. She noted this concept has been referred to by this Court in Gustav & Co Ltd v Macfield Ltd [2007] NZCA 205.
[52] We find the reference to Gustav unhelpful in the context of this case. There is no similarity between the facts here and those which existed in that case.
[53] Ms Hildred and her advisers were free to take whatever action they wished to check factual matters, to obtain disclosure and to involve themselves in the normal processes of the law which are available when there is a need to access information in another party’s hands. There is no foundation for contending that the appellant lacked the ability or information to correct what was being said by Ms Strong. Similarly we reject the contention that, because the ORL shares were in the name of Ms Strong, the appellant was disadvantaged. More often than not proceedings of this nature involve claims to property which is in the name of another.
[54] We acknowledge that there were a number of points on which the Judge rejected some of Ms Strong’s evidence. If the Court were to adopt the view espoused by Ms Cull as to the application of Professor Bigwood’s principles, there would be few if any cases in which this sort of challenge could not be advanced. It requires clear, cogent and convincing evidence (of which there is none in the present case) before such disadvantage has legal significance.
[55] We reject the contention that Ms Hildred suffered from an inequality of bargaining power. We reject counsel’s labelling of the actions of Ms Strong as deceit. Each party had a perception. The Judge made no finding as to any moral overtone and the submission lacks an evidential basis.
Duress
[56] MacKenzie J adopted Ms Cull’s contention that the test for duress is as noted in Haines v Carter [2001] 2 NZLR 167 (CA) where Young J (as he was then) said for this Court:
[108] Duress necessarily involves the illegitimate application of pressure by threats. The illegitimacy of the pressure may lie in the illegality of the actions threatened or, alternatively, may be associated with the illegitimacy of the particular threats in the context in which they were made.
He also referred, as Ms Cull had, to Shivas v Bank of New Zealand [1990] 2 NZLR 327 (HC) where Tipping J said at 345:
Unless the party seeking to avoid the contract establishes that his will has been compelled to such an extent as to vitiate his consent, then the question of the legitimacy or illegitimacy of the pressure will not arise. Assuming however that this first hurdle is jumped, the party seeking to avoid the contract must show that his will has been overborne by illegitimate commercial pressure.
[57] Mackenzie J then said at [58]:
An allegation of duress is a serious allegation to make, and ought to be properly pleaded and particularised, so that the party facing it is squarely faced with what is alleged. None of the matters pleaded is, in my view, capable in law of amounting to duress. Nor is there anything in the evidence which might, if properly pleaded, amount to duress.
[58] Although the issue of duress was not withdrawn, there was no serious challenge to the conclusions reached in the High Court.
Misrepresentation
[59] The appellant submitted that the Judge erred in his assessment of the effect of s 7 of the Contractual Remedies Act 1979 (CRA) when he said at [62]:
…I have already commented upon the tendency of the defendant to overstate her own contributions. In considering whether those, or the other matters to which I have not specifically referred, are to be regarded as misrepresentations, the context in which the statements were made needs to be acknowledged. In negotiations for a relationship property settlement, it is not uncommon for the parties to have widely divergent views about their respective contributions. It is also not uncommon for those views to be asserted in the strongest possible way. There is a need to avoid attributing the character of a representation to a statement which is in the nature of advocacy. Many of the assertions of the defendant need to be seen in that light. Having heard both parties give their evidence in this Court, I have no doubt that the defendant at the mediation would have asserted her position strongly. In her mediation statement, she made assertions as to her contributions which, as I have held, were not sustainable. I find that her assertions that she made a much greater contribution than the plaintiff to the properties, the relationship and the business, were not justified. It is, however, quite another matter to treat those assertions which, in many respects, were equally within the knowledge of the plaintiff as of the defendant, and upon which the plaintiff would have had a different perspective, as misrepresentations.
[60] The first problem is that there was no pleading under the CRA and no application to amend the Statement of Claim to include it. Even if s 7 of the CRA could have been called in aid, there is no evidence that there has been a cancellation of the contract on the basis that Ms Hildred had been induced to enter into the settlement by a misrepresentation (whether innocent or fraudulent) made by Ms Strong.
[61] Next, the tests in s 7(4) must be met. These are:
4Statements during negotiations for a contract
(1)If a contract, or any other document, contains a provision purporting to preclude a Court from inquiring into or determining the question:
(a) whether a statement, promise, or undertaking was made or given, either in word or by conduct, in connection with or in the course of negotiations leading to the making of the contract; or
(b) whether, if it was so made or given, it constituted a representation or at term of the contract; or
(c) whether, if it was a representation, it was relied on – the Court shall not, in any proceedings in relation to the contract, be precluded by that provision from inquiring into and determining any such question unless the Court considers that it is fair and reasonable that the provision should be conclusive between the parties, having regard to all the circumstances of the case, including the subject-matter and value of the transaction, the respective bargaining strengths of the parties, and the question whether any party was represented or advised by a solicitor at the time of the negotiations or at any other relevant time.
(2)If a contract, or any other document, contains a provision purporting to preclude a Court from inquiring into or determining the question whether, in respect of any statement, promise, or undertaking made or given by any person, that person had the actual or ostensible authority of a party to make or give it, the Court shall not, in any proceedings in relation to the contract, be precluded by that provision from inquiring into and determining that question.
(3)Notwithstanding anything in section 56 or section 60(2) of the Sale of Goods Act 19809, this section shall apply to contracts for the sale of goods.
(4)In any proceedings properly before a Disputes Tribunal, this section shall not limit the powers of the Tribunal under section 19(7) of the Disputes Tribunals Act 1988.
[62] It was argued that the Judge was wrong to characterise the assertions made by Ms Strong as “in the nature of advocacy” when in fact the Judge had found that assertions made by Ms Strong in the “strongest possible way” were not correct.
[63] It is unsustainable to say that Ms Strong’s perceptions were representations upon which Ms Hildred and her lawyer and anyone else relied. That had been challenged in correspondence between the parties. They were rejected by Ms Hildred’s mediation statement. On virtually every significant point there were different perceptions.
[64] Questions of title were available on public records. Bank statements were available to each of them. The documentation relating to business activities were available to them both. They had each been directors of ORL.
[65] If Ms Hildred now feels that she went to mediation inadequately prepared, that is not a reason to elevate the position taken by her former partner to a representation nor a ground for the Court to grant relief. When parties elect alternative dispute resolution they embrace the advantages which it can provide and live with any downside which flows from it.
[66] Ms Cull frequently returned to a “pattern of deceit” but there is no evidential foundation for that submission. MacKenzie J did not suggest that there should be a different regime in respect of matters which have been subject to mediation. He simply held that the forceful assertion of a particular perspective in a mediation did not constitute a representation.
[67] Similarly we repeat our rejection of the contention that Ms Hildred had no option but to rely on what Ms Strong said. That avoids the reality of what she and her legal representatives could have done before or during mediation or at any other time prior to her voluntarily entering into the settlement.
[68] The appellant further submitted:
The most important factor in relation to the mediation was the basis upon which the mediation proceeded, namely that the respondent was the sole shareholder of ORL, that she had run it as her own business and that she had made the greater contribution.
It is plain that none of the solicitors present, nor the appellant, was aware of the extent of the actions of the respondent and the manner in which she had acquired the sole shareholding of ORL.
[69] We agree with MacKenzie J that because Ms Strong had constantly and consistently maintained her perspective that did not provide a basis for relief under the CRA.
Mistake of law
[70] In the sixth cause of action, reference was made to “mistake” under both the CMA and the rules of the common law and/or equity. This submission is rooted in the fact that the Judge, in the course of his reasons, made comment both about express common intention and contribution. As noted earlier, these issues only become relevant if and when the parties’ settlement has been set aside. The relevant part of the pleading was:
10.2The plaintiff was influenced in her decision to enter into the settlement agreement by the advice given her by the defendant through her solicitor that she was not entitled to a half share interest in Outlook Resources nor any properties or chattels which had been financed from the funds of Outlook Resources. The advice as aforesaid was wrong but was material to the plaintiff in entering into the settlement agreement.
10.3The defendant was aware that the advice given the plaintiff and the failure by the defendant to provide documentation relevant to the allegations contained in paragraphs 2.2 to 2.5 of this claim influenced the plaintiff, by mistake, to enter into the settlement agreement on terms unfavourable to her.
10.4Alternatively, if the defendant was unaware of the plaintiff’s entitlement to a half share interest in Outlook Resources both parties entered into the settlement agreement under the same mistake.
10.5The parties and their legal advisers were mistaken as to the legal principles governing the property division between the plaintiff and the defendant and entered into the settlement agreement under the same mistake.
[71] The CMA is a code and enables relief to be granted when the conditions contained in s 6 are met.
[72] Despite extensive discussion on the issue in the course of the appeal hearing, there was no evidence from Ms Hildred to satisfy the pleaded position. The statutory test is “influence” and there is certainly no direct evidence of it nor a credible basis to draw an inference.
[73] There was the not uncommon situation of people who had been in a relationship harbouring very different perspectives as to the nature of that relationship and the acts and omissions of each other during the course of it.
[74] We are again in the area of speculation and surmise. How exactly Ms Hildred and Ms Strong decided on a division is not before the Court, nor should it be.
[75] It is asserted that there were five critical factors which governed the mediation, namely:
(a)the legal misunderstanding about contributions, not express intentions, as being the basis for division of de facto property;
(b)the appellant, her legal adviser and the respondent’s solicitor were not aware of the transactions that had occurred in relation to ORL, UTT and the actual financial transactions that made up the acquisition of the properties;
(c)there was no agreed calculation or figures available, so that each party was aware of the percentage they were receiving;
(d)the mediation proceeded on the basis of contributions; and
(e)no heed was paid to the joint approach to ownership of the properties and the property agreements.
[76] None of these factors assist in the fundamental point which has to be determined. Whether, under the law which applied at the relevant time, common intention or contribution would have been influential does not assist as these parties chose to make their own bargain.
Conclusion
[77] On the basis of the pleadings, there is nothing which would enable us to reach a different conclusion than that of MacKenzie J.
[78] We have given anxious consideration to the issue which emerged in the course of the hearing, namely the extent to which the value of the shares in ORL might have permeated the bargaining processes leading to the settlement. In the absence of any evidence that that was the case, there is no basis to justify intervention.
Additional factors
[79] Ms Cull submitted that, although not grounds in themselves, two other matters should be considered because they indicated practical problems with the settlement. First, that no value was attributed to the Honda car and secondly uncertainty about the boundary adjustments for the cottage at 17 The Parade.
The Honda car
[80] This is a prime example of attempting to do an exercise about how the parties’ settlement was reached when that is not a legitimate avenue of inquiry. In cl 4 of the Settlement Agreement, noted in [6], it clearly and unambiguously shows that “Ms Strong shall retain the Honda vehicle as her separate property ...”. Whether before the settlement it was jointly owned is totally irrelevant and uninformative.
[81] What value was attributed to the car in the mediation process we do not know. The settlement agreement conclusively and definitively deals with the Honda. Suggestions that it was overlooked or ignored by the Judge are quite unhelpful because the Judge did not ever get to the point of making his assessment of what a proper division should have been. For completeness, we note that an application to him post judgment to deal with the Honda under the slip rule was unsuccessful.
The boundary dispute
[82] Apparently, and perhaps in light of the events of the past five years not surprisingly, there is an uncompromising position being adopted with regard to the subdivision of the cottage which was on the site at 17 The Parade, Paekakariki. There were interim relief proceedings in the District Court as long ago as 2003 which will have to be pursued if no sensible accommodation can be reached.
Result
[83] There is no basis to interfere with the High Court decision. The finding that the agreement is binding renders moot a consideration of the first five causes of action advanced.
[84] The appeal is dismissed. The respondent is entitled to costs of $6,000 together with usual disbursements.
Solicitors:
Sladden Cochrane & Co, Wellington, for Appellant
Margaret Powell & Wendy Davis, Wellington, for Respondent
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